Written and reviewed by Kevin Nerway · Last verified 18 September 2026
Key Takeaways
- The U.S. Federal Reserve raised its benchmark interest rate for the first time in 38 months on September 18, 2026, citing persistent inflation and rising oil prices.
- USD/KRW gained 0.40% to reach 1,385.48 while EUR/KRW advanced 0.50% to 1,591.20 during Friday's Asian trading session.
- Federal Reserve Chair Kevin Warsh identified strong economic growth, funding competition among tech hyperscalers, and global conflicts as key drivers of yield pressures.
- Global government bond yields reached a 19-year high, while the 10-year U.S. Treasury yield turned lower after eight consecutive days of gains.
The Policy Pivot: Federal Reserve Tightens as Inflation Resurges
I am Kevin Nerway, lead analyst at PropFirmScan. On September 18, 2026, our desk tracked an abrupt monetary policy pivot by the U.S. Federal Reserve, which delivered its first benchmark interest rate increase in three years and two months. Driven by accelerated inflation pressures and persistent gains in international crude oil, the decision signaled a sharp departure from market easing expectations.
Through its updated dot plot, the Fed explicitly signaled that policymakers have left open the possibility of one additional rate hike before the end of the year. This aggressive stance reflects heightened concern over persistent energy price shocks and underlying macro resilience. Traders navigating this shift must evaluate how rate decision impact on professional traders alters structural order flow and dollar liquidity across major currency pairs. At the same time, traders must manage elevated drawdown exposure during rate decision windows to prevent sudden account breaches.
Asian Currency Response and Korean Equity Divergence
The immediate FX repricing was pronounced across Asian currency pairs during Friday's session. USD/KRW advanced 0.40% to trade at 1,385.48, widening the policy differential between Washington and Seoul. EUR/KRW similarly gained 0.50% to settle at 1,591.20. The policy gap expands despite the Bank of Korea having raised its own interest rates last month, while the Bank of Japan is widely expected to tighten borrowing costs in upcoming meetings.
Despite currency weakness, South Korean benchmark equity indexes staged a robust rally. The KOSPI surged 2.60% to close at 6,890.15, while the tech-heavy KOSDAQ rose 1.47% to 827.96. For currency specialists working with the best forex prop firms, cross-asset divergences of