Fed's interest rate decision in the spotlight
US and European stock indices are showing signs of uncertainty as investors, await the US Federal Reserve's (Fed) interest rate decision, which is expected on Wednesday evening (September 16). Meanwhile, markets are navigating conflicting forces of the European Central Bank’s (ECB) recent interest rate decision and inflationary pressures stemming from energy markets.
Interest rate hike expected
Markets expect the Fed to implement a 0.25 percentage point (25 basis point) increase at Wednesday's meeting. Interest rates have remained unchanged for a long time, and this increase would bring the benchmark rate to the 4%.
Inflation has remained stubbornly high for a prolonged period, a trend also reflected in the US inflation figures for August, which were released last week. CPI data published on Friday, September 11, showed that consumer price inflation had held steady at 3.4 percent (year-on-year). Producer price index (PPI) figures released earlier that same week also showed signs of acceleration; the year-on-year PPI exceeded expectations, rising to 5.4 percent against a forecast of 5.3 percent.
One of the main causes of ongoing inflation has been the sharp rise in energy prices, influenced by the escalating situation in the Middle East and the Strait of Hormuz.
Following the interest rate decision, comments by Fed Kevin Warsh and the central bank's outlook will also emerge as key themes.
S&P 500
In the United States, the S&P 500 index has been in a moderate downtrend for around a month. The decline from the index's all-time high (ATH) is approximately 2–3 per cent, significantly less than the drop seen in Europe, for instance, with indices such as the DAX. Examining the one-year chart (daily candles), it can be seen that the index dipped briefly below the key 50-day simple moving average (SMA50, shown in blue) and previous highs at the $7,620 level last week. However, it recovered above these points by Friday. If the price falls below these levels again, this could be interpreted as a sign of weakening momentum from a technical analysis perspective.
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ECB raised interest rates – What is the direction of the DAX index?
In Europe, investors are still coming to terms with the ECB's decision last week (September 10) to raise its key interest rate to 2.50 per cent.
Inflation has also remained persistent in Europe. In August, the inflation rate for the euro area in August was 3.3 percent (year-on-year). The conflict in the Middle East and rising energy prices having a direct impact on Europe, with energy inflation alone also reaching 14.3 percent - the highest figure since January 2023.
Elevated inflation and energy prices are having a significant impact, particularly on German industry and price movements within the DAX index in particular. The index has fallen by around 4% from its all-time high (ATH); and a one-year chart showing daily candles reveals that the price has slipped below the shorter-term moving averages (EMA25 in yellow and SMA50 in blue). From a technical analysis perspective, this is considered a bearish signal. However, the price has found temporary support near the 25,500 level, corresponding to previous highs. A decisive break below this level would further weaken the index's technical outlook. The one-year chart (daily candles) also highlights the important SMA200 moving average, which is currently around 3 percent away.
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Oil price hovering around $110
Regarding inflation and central bank decisions, it is also essential to highlight the trend in oil prices, which have risen significantly as the conflict in the Middle East continues.
Brent crude oil has risen by nearly 20 percent during September 2026 alone. At the beginning of September, the price was hovering around $90 per barrel, whereas now, in mid-September, it is close to the $110 level. The price of oil has returned to the levels seen in the spring of 2026.
From a technical perspective, a very strong upward trend is evident in oil prices, with no sustained downward corrections observed, aside from a few days. If the price continues to rise at the same pace, this is a factor worth noting regarding future inflation figures and central bank interest rate policies.
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Summary
An interesting week lies ahead for the markets. The Fed’s interest rate decision and the subsequent press conference could trigger significant market volatility. Investors should be prepared for increased price fluctuations and closely monitor energy price trends throughout the week.
Indicators shown on the charts:
- SMA200: 200-Day Moving Average, red.
- SMA50: 50-Day Moving Average, blue.
- EMA25: 25-Day Exponential Moving Average, yellow.
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