📢 Four central banks made decisions within eight days. The ECB, the Fed and the Bank of Japan raised interest rates, while the Bank of England held steady. Yet only one currency finished the week stronger: the US dollar. That is the key theme running through every asset below.
📈 NQ / ES Futures
The Fed raised rates by 0.25% to 3.75%-4.00%, its first hike since 2023. The bigger story was its outlook: 16 of 18 officials expect at least one more hike this year, while four expect two. Chair Kevin Warsh also said underlying inflation has shown no meaningful improvement.
Stocks fell before the decision but rebounded on Thursday as yields stabilised. For the week, the S&P 500 gained 0.7%, the Nasdaq rose 2.6%, and the Dow lost 733 points. The 10-year Treasury yield ended near 5.00%, its highest level since 2007.
Two other developments are worth watching:
SpaceX’s weighting in the Nasdaq-100 will more than double at Monday’s quarterly rebalance. This could trigger an estimated $15.5-22 billion in automatic buying.
A new SEC “Innovation Exemption” for tokenised versions of US-listed stocks pushed Coinbase, Robinhood and Strategy sharply higher on Friday.
On the 4-hour chart: NQ and ES sold off into the Fed decision, reached the bottom of their ranges and quickly bounced. This suggests range behaviour rather than a breakout.
On the technical side:
NQ: Resistance at 30,020-30,300 and support at 29,015-29,135. It is trading near 29,955.
ES: Resistance at 7,760-7,800 and support at 7,560-7,600. It is trading near 7,725.
Until either range breaks, we are focused on selling near resistance and buying near support. No breakout trade until there is a clear move beyond these zones.
🇪🇺 EUR/USD
The ECB raised its deposit rate to 2.50%, its second increase this year, as higher energy prices continue to fuel inflation. Christine Lagarde said decisions will remain meeting by meeting. She also noted that growth looks slightly better than expected, with no clear signs of second-round inflation effects yet. The ECB’s next decision is on October 29.
However, the Fed’s hawkish outlook had a greater impact. EUR/USD ended the week below 1.1500, its lowest level since late July. Markets now see around a 55% chance of another Fed hike on October 27-28, while the Dollar Index has climbed above 100.50.
On the chart:
EURUSD 4 Hour Chart
Price continued lower and is now near 1.1486
We are watching for another short if price returns to our Point of Interest (POI)
Our swing short, which was triggered on September 6, hit its target last week.
EURUSD 4 Hour Chart: Our Short Swing position fully closed.
🇬🇧 GBP/USD
The Bank of England was the only one of the four central banks that did not change rates. It voted 6-3 to keep Bank Rate at 3.75%, although three members supported an immediate increase to 4%.
UK inflation reached 3.1% in August and is forecast to approach 4% by early 2027. Governor Andrew Bailey said the Bank is comfortable holding for now, but the case for a hike is growing as the conflict continues. Markets see around a 65% chance of a hike on November 5.
Sterling initially rose after UK retail sales increased 0.5%, beating expectations of a 0.2% decline. It later gave back most of those gains as renewed concerns about oil supplies added to inflation fears.
On the 4 hour chart chart: the move lower we expected last week played out.
GBP/USD fell from 1.3460-1.3480 to around 1.3330
Price is currently near 1.3394. We are watching 1.3460-1.3480 as a potential shorting zone if price retests it
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🇯🇵 USD/JPY
The Bank of Japan raised rates by 0.25% to 1.25%, the highest level since 1995. This would normally strengthen the yen, but it weakened instead.
The decision passed by 7-2, with the two newest board members voting to hold. Traders took this as a sign that the BOJ may not fully agree on further hikes. USD/JPY climbed as high as 158.06 before pulling back.
Governor Kazuo Ueda said the BOJ will continue raising rates if the data supports it. However, Middle East tensions, AI-driven demand and currency volatility remain key risks.
On the 4 Hour chart:
USDJPY 4 Hour Chart
We are watching the 158.925-160.907 zone, which rejected price twice in August before the early-September decline
USD/JPY is currently near 156.87, after recovering from this month’s low near 152.10
We are waiting to see how price reacts. A clear rejection would support another short, while a break and hold above 160 would change the outlook.
👁️🗨️ Special Mention: AUD/JPY - Trade of the Week
Our AUD/JPY long from 109.80-110.00 played out in full after price bottomed on September 13.
Our AUD/JPY long from 109.80-110.00 played out in full after price bottomed on September 13.
Target 1: 111.40-111.60 ✅
Target 2: 112.40-112.60 ✅
Both targets were reached as the yen weakened following the BOJ decision. The pair peaked near 112.60 before settling around 111.80, completing the trade within about a week.
To follow our trade ideas throughout the week instead of waiting for the Sunday letter, join our free Telegram channel:
🧩 Final Word
Three central banks raised rates this week, while one held. Yet the US dollar still finished stronger against every currency covered in this letter. The Fed was the most hawkish, while the ECB and BOJ showed enough hesitation to weaken the impact of their hikes.
The charts are now at key decision points:
NQ and ES remain inside their ranges
EUR/USD and GBP/USD are trading below broken support
USD/JPY is approaching a major resistance zone
AUD/JPY was the clearest trade of the week. It worked because we had a defined entry zone and two clear targets, not because we guessed the market’s next move.
Conviction without a plan is gambling. But when you have a map, a clear plan and genuine conviction, do not be afraid to execute it.
With that said, Stay Patient and Stay Safe.
Until next time… happy trading!
— The UE Market Letter Team 👁️🗨️
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