The Fed Hiked to 4%, and Risk Assets Ripped Anyway.

Hey traders, Ezekiel here. Well, the Fed finally pulled the trigger, and the market’s reaction was the opposite of what most people braced for. Let’s unpack what actually happened and how to trade what comes next.

• Today’s market mayhem. S&P 500, EUR/USD, Bitcoin, and XAU/USD at a glance
• The Fed hiked to 4.00%, its first rate rise since 2023, and signaled it isn’t done yet
• Risk assets rallied on the news anyway, and Bitcoin ripped back above $80K into extreme greed
• Why “higher for longer” is now the backdrop every trade has to respect
• The liquidity concepts behind why your stops keep getting hit, backed by 10 years of data, in our latest video

The event everyone waited for finally landed, and it flipped the script. Here’s the board. 📈

It finally happened. On September 16 the Federal Reserve raised rates by 25 basis points to 3.75–4.00%, its first hike since 2023, in a unanimous 12-0 vote. And it didn’t stop there, the projections showed 16 of 18 policymakers expect at least one more hike before year-end. 📉

Textbook logic says higher rates should sink stocks. Instead, they rallied. The S&P 500 climbed about 0.9% on the week to 7,650.50, because the hike was so widely expected that the uncertainty lifting mattered more than the hike itself. Classic sell the rumor, buy the news. 🚀

The one place the pressure showed up was rates and the dollar. The 10-year Treasury yield pushed back to around 5%, its highest since 2007, and that kept the dollar firm, nudging EUR/USD down toward 1.149. 💵

🤔 Asia Forex Mentor Insights

The lesson here is one traders relearn every cycle, the news everyone sees coming is usually priced in long before it prints. The move to watch wasn’t the hike, it was the guidance, and “higher for longer” is now the backdrop every trade has to respect.

For EUR/USD, a Fed that’s still tightening keeps the dollar firm, so fading dollar strength here is swimming against the tide, trade with it until the data turns. And remember, a stock market that rallies on a hike is running on relief and momentum, not easy money, so keep your stops honest. 📊

Crypto was the cleanest expression of the relief trade. Heading into the decision Bitcoin was languishing near $75,600. The second the hike landed and the uncertainty cleared, it ripped back above $80,000, spiking to roughly $86K midweek before settling around $81,250. 🚀

That’s a textbook liquidity-sensitive asset doing its thing, once the worst-case unknown is off the table, the most beaten-down risk asset snaps back hardest. On the week, Bitcoin is up around 7%. 🟢

Sentiment flipped just as fast. The Fear & Greed Index jumped to 78, the first extreme-greed reading of the month, up from the neutral-to-fearful levels heading into the Fed. 💰

🤔 Asia Forex Mentor Insights

The reclaim of $80K is a genuine change of character, that level was a battle line for weeks and it’s now the floor to defend. A coil that resolves up on a major event is usually a signal worth respecting. 🧠

But here’s the discipline part, extreme greed is not a buy signal, it’s a caution flag. Readings above 75 mean the crowd is already positioned and leverage is building, which thins the margin for error. Don’t chase green candles into a 78 print, let it cool, and treat $80K as your line, hold it and the trend is intact, lose it and the relief rally is in question. 📊

Stops exist for a reason 😬

The trader’s forced smile 🙂