Global markets met the new week with some volatility after the Fed decision and geopolitical events that may pave the way for future trends. The FOMC delivered a rate hike, which is the first hawkish move since 2023. The European Central Bank hiked rates as well, and the crude is trading near $100 on escalations in the Middle East. There are enough drivers to move prices, and now traders should decide which one will dominate price action.

The Fed came up with a unanimous decision to lift the federal funds rate to 4.0%. This was the first hawkish move of Kevin Warsh, the new Fed Chair after he substituted Jerome Powell. The Summary of Economic Projections sent a clear message to the markets. The committee may continue its tightening steps until inflation is back to target levels. 

Core PCE inflation was revised up to 3.4% for 2026, and most of the participants expect the FOMC to hike the rate again this year. Warsh mentioned that current financial conditions are not restrictive, and most FOMC members agreed with him. 

The European Central Bank brought the rate to 2.5% as inflation accelerated to 3.3% this year. Moreover, Middle East tensions may fuel up energy prices, which may lead to another inflation cycle.

The geopolitical backdrop remains the wild card. US forces continue to strike Iran, while Tehran threatens to strike US assets across the Gulf. The Strait of Hormuz remains the main risk vector for oil prices.

EUR/USD: ECB Hikes, But Guidance Is the Real Variable

The Euro has found support from the ECB decision, but the move was priced in advance. What matters now is forward guidance. Lagarde refused to give any further comments on the monetary policy trajectory, which adds uncertainty but puts pressure on the euro. Eurozone’s inflation remains above target, which, in turn, gives some support to the currency. Therefore, ECB has a difficult calculus. Further hiking may put pressure on economic growth. However, if the ECB pauses too soon, inflation may continue to rise.

From a technical analysis perspective, the currency pair remains in a tight range between the two Bollinger Bands, marking the absence of any clear trend direction. Traders can use the following entry points:

Buy: 1.1470 Targets: 1.1500 and 1.1550

Sell: 1.1450 Target: 1.1400 and 1.1380

GBP/USD: A Diverging Policy Path

The British pound is caught between two dynamics. On the one side, the Bank of England held rates at 3.75% for the six consecutive meetings. However, the vote split 6-4 in favor of holding, which means that the decision wasn’t unanimous. Three members support a rate hike. The BoE governor Andrew Bailey mansions that if the Iran conflict continues, then the monetary policy may have to be tightened again. 

From a technical analysis perspective, GBP/USD is trading close to the bottom line of the Bollinger Bands with the downside slope. Traders can watch the following entries:

Buy: 1.3380 Targets: 1.3450 and 1.3500

Sell: 1.3350 Targets: 1.3300 and 1.3280

WTI Crude: The Geopolitical Premium Returns

Oil has taken the stage again. Increased military tensions between the US and Iran caused WTI to surpass $100 for the first time since May. Iran issued a warning that the Gulf’s energy infrastructure, including US interests, was at risk after US Marines attacked three Iranian oil tankers, one of which was close to Kharg Island. 

Goldman Sachs has increased its WTI prediction to $80 for December 2026, assuming that shipping delays in the Middle East will last until 2027. Now, the question is whether the premium can keep prices over $100 or if a diplomatic opening may cause a dramatic decline. 

From a technical analysis perspective, oil is trading close to the lower band of the Bollinger Bands indicator. Traders can find the following entries:

Buy: 94.80 Targets: 96.00 and 98.00

Sell: 93.20 Targets: 91.00 and 90.00

XAU/USD: Caught in the Crossfire

Two strong forces are engaged in a tug-of-war over gold. The US-Iran crisis has, on the one hand, rekindled the desire for safe havens. Conversely, the opportunity cost of owning gold increased as a result of the Fed’s raise, which drove Treasury rates to multi-year highs (the 10-year hit almost 5%). 

The August CPI, which matched forecasts but confirmed that inflation is still sticky, came in at 3.4% year over year. Whether geopolitical risk predominates or whether the market fully prices in the Fed’s tightening path will determine the direction of the metal.

From a technical analysis perspective, gold is trading close to 4,300 with the price testing the lower Bollinger Bands line. Traders can watch the following entries:

Buy: 4,330 Targets: 4,360 and 4,380

Sell: 4,310 Targets: 4,290 and 4,270