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Forex Signals Sept 18: Powell’s Caution Tempers Dovish Expectations, What It Means for BOE
Global markets steadied after the Federal Reserve’s latest policy move, leaving traders cautious ahead of the Bank of England’s upcoming...
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Last updated: Wednesday, September 17, 2025
Quick overview
- Global markets stabilized after the Federal Reserve's recent policy decision, with traders remaining cautious ahead of the Bank of England's meeting.
- The Fed's statement indicated potential future rate cuts, but market sentiment shifted as Powell emphasized a data-dependent approach.
- Equities experienced initial selloffs but recovered by the close, while currency markets showed increased volatility, particularly in USD/JPY.
- Attention is now focused on the Bank of England's response to ongoing inflation and growth concerns, which could influence GBP volatility.
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MARKETS TREND
Global markets steadied after the Federal Reserve’s latest policy move, leaving traders cautious ahead of the Bank of England’s upcoming decision.
Calm Before the Fed and BOE Decisions
In the hours leading up to the FOMC statement, markets showed early hints of profit-taking. Gold prices eased, the U.S. dollar strengthened, and equities trended slightly lower. Trading stayed largely sideways, a common pattern before major central bank announcements.
Fed Delivers a “Risk Management” Cut
The Fed’s statement initially looked dovish, suggesting two more rate cuts by year-end, but market sentiment shifted after closer scrutiny. A narrow 10–9 split was influenced by the addition of Governor Miran, highlighting divisions within the committee.
Powell’s press conference marked a turning point. He played down recent NFP revisions, instead pointing to immigration as a driver of labor market changes. More importantly, Powell labeled the move a “risk management cut”, signaling a data-dependent approach going forward. While he reassured markets that inflation pressures had cooled since April, he stopped short of providing the dovish pivot investors had hoped for.
Market Response: Equities Recover, FX More Volatile
The press conference initially sparked a sharp selloff in U.S. equities, but dip-buying quickly restored balance, leaving indices largely unchanged by the close.
Currency markets, however, showed stronger reactions. The USD/JPY dropped from 146.25 to 145.50, only to rebound to a session high of 147.02—a reminder that FX moves often take longer to fully adjust to Fed policy shifts.
Key Market Events to Watch Today
Looking Ahead: The BOE in Focus
While traders continue to digest the Fed’s signals, attention is shifting to the Bank of England meeting. Markets are weighing how U.K. policymakers will respond to a backdrop of sticky inflation and softening growth. The BOE’s tone could either reinforce the Fed’s cautious path or highlight policy divergence, setting the stage for heightened volatility in GBP pairs.
Last week, markets were quite volatile again, with gold soaring to $3,6065. EUR/USD continued the upward move toward 1.17.80, while main indices closed higher again. The moves weren’t too big though, and we opened 35 trading signals in total, finishing the week with 23 winning signals and 12 losing ones.
Gold Reaches Another Record High, Then Reverses Sharply
Although demand for safe haven assets is still high, gold fell precipitously from record highs following the Fed’s most recent rate decrease as profit-taking was prompted by Powell’s cautious tone. Earlier this week, gold jumped beyond $3,700 and reached $3,707.42 following the Federal Reserve’s announcement of a 25 basis point rate decrease to 4.25%. But the impetus soon waned, and prices dropped back to $3,646, a $60 decline from the new all-time high. As traders locked in profits after the rally driven by dovish predictions, there was a sudden fall.
USD/JPY Continues Trading in the Range
Foreign exchange markets saw sharp swings. Early in the week, U.S. yield differentials and Japanese capital outflows pushed the dollar above ¥150, but disappointing U.S. jobs data triggered profit-taking, causing the USD/JPY to slide by four yen from its peak. The move underscored persistent volatility as traders weighed Japan’s intervention risks against evolving Fed expectations.
USD/JPY – Weekly Chart
Cryptocurrency Update
Bitcoin Continues the Rebound Off the 20 SMA
Cryptocurrencies remained highly active over the summer. Bitcoin (BTC) climbed to fresh highs of $123,000 and $124,000 in July and August, supported by institutional inflows and technical strength. However, remarks from Treasury Secretary Scott Bessent ruling out U.S. increases to BTC reserves triggered a steep pullback, sending the coin down to $113,000 before recovering above $116,000 last week, however sellers returned and sent BTC below $110,000, however we saw a rebound off the 20 weekly SMA (gray) yesterday.
BTC/USD – Weekly chart
Ethereum Climbs Above $4,500
Ethereum (ETH) has been similarly strong, surging toward $4,800, its highest since 2021 and near its all-time peak of $4,860. Despite a dip last week, ETH found support at the 20-day SMA, with retail enthusiasm and renewed institutional participation driving fresh upside momentum. However buying resumed and on Sunday ETH/USD printed another record at $4,941. However we saw a retreat to $,000 lows over the weekend, but yesterday buyers returned.
ETH/USD – Daily Chart
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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