The Federal Reserve hikes to 4%, six days after the ECB
The Fed has raised its rate to 3.75-4.00%, its first increase since 2023 and its first move of any kind since the cut in December 2025. Six days ago the European Central Bank (ECB) raised its deposit rate, the return banks earn on money parked with it, by the same quarter-point to 2.50%. So both sides of this pair repriced inside a week. Take the middle of the new American range and the Fed pays 3.875% against the ECB's 2.50%, a gap of 1.375 points. The vote was unanimous at 12-0, and the statement said nothing about what comes next. That is exactly where the gap sat before either of them moved.
The whole reaction fits inside one five-minute bar. The pair ticked up on the release, then reversed and fell 31 pips before the bar was out, which is three-quarters of the range it had built all session. It changes hands in the 1.1500 area at the low of the day, roughly 20 pips below where it sat going into 18:00 GMT. The day's high just above 1.1550 was made in the European morning and is now 42 pips away. The five-minute momentum gauge reads near 33, which is mid-range, because the drop came faster than the indicator measures.
