September 10, 2026 became the day when the world’s two largest central banks were set to tighten policy in tandem. The European Central Bank raised its deposit rate to 2.50%, and the Federal Reserve is preparing to do the same on September 16 – markets assess the probability of a hike at 58–60%.

It seemed that both regulators were moving in the same direction, which should have strengthened both the dollar and the euro. Instead, the EUR/USD pair got stuck in the 1.1590–1.1650 range, and the dollar index DXY is hovering around 99. Markets have already priced in both hikes. The main intrigue lies not in the decisions themselves but in what the central bank heads will say afterward.

ECB hikes, but the market no longer notices

On Thursday, September 10, the European Central Bank raised its deposit rate by 25 basis points to 2.

Despite the expected rate hike, the dollar is not receiving the usual support. The DXY index, which fell to 98.55 at the end of August, was trading around 98.84 on September 9. The market seems unwilling to believe that a rate increase can restore the dollar’s former strength. As ING notes, “we expect the Fed’s rate hike on September 16 to provide temporary support for the dollar—especially against low‑yielding currencies,” but no more.

Why both hikes aren’t working

When both central banks tighten policy, it creates a unique dynamic. The EUR/USD pair is not trading on a direction. It trades on which regulator sounds more hawkish.

The problem is that both central banks are already priced in. The market knows that the ECB will raise rates, and that the Fed will likely do the same. Therefore, instead of a directional move, we see consolidation. As the analytical portal Investing.com notes, “when both central banks tighten policy, the pair does not trade on a direction.”

Additional pressure on the euro comes from political risks in Europe. The rally in European bond yields is a “nice picture,” but there are problems hidden within it. Investors are shedding French and Italian securities the fastest, where budget issues exist. The yield on 30‑year German bonds has surged to peaks not seen since 2011. Political risks—from a potential vote of no confidence in Germany to a debt crisis in France—add further pressure on the euro.

What next: the US CPI will decide everything

The coming days will be