Forex week in review 18/2026: four central banks hold, Japan steps in

Four of the world's most important central banks met within three days, and none of them moved. That would normally make for a quiet week in currencies. Instead it was one of the most eventful of the year, because every one of those holds leaned hawkish, oil hit its highest price since 2022, and on Thursday Japan's authorities appear to have stepped into the market to support the yen.

The net weekly numbers look calm. According to RTTNews closing levels, the Dollar Index fell 0.38% to 98.16 and EUR/USD finished almost exactly where it started at 1.1721. The real action was in USD/JPY, which reached 160.7 and then fell more than five yen in a matter of hours.

Where we were coming into the week

Last week ended with the Strait of Hormuz closed again, ships being seized by both the US and Iran, a ceasefire extended without any talks scheduled, and the US blockade of Iranian ports still in force. Brent was back above $100. The dollar had just ended a three-week losing streak. And USD/JPY was sitting at 159.38, close to the 160 level that the market regarded as sensitive for Japan.

That was the setting for a week with four central-bank decisions.

The week day by day

Monday 27 April: a quiet start

Monday's calendar was light: German consumer confidence and the Dallas Fed manufacturing index. Markets were positioning for the central-bank run.

Tuesday 28 April: the Bank of Japan holds, with three dissents

The Bank of Japan kept its policy rate at 0.75%. Three of the nine board members voted against the decision, which Capital Economics described as the most widespread dissent since negative rates were introduced in 2016, according to Daily Sabah's report. The BoJ raised its consumer-price forecast for the current fiscal year to 2.8% from 1.9% and halved its growth forecast to 0.5% from 1.0%. That combination of higher inflation and weaker growth is a direct result of the oil shock. The yen strengthened a little after the decision, to about 159.00 per dollar from about 159.60.

Wednesday 29 April: the Fed holds, four dissent

The Federal Open Market Committee kept the federal funds rate in a 3.50–3.75% range. The vote was 8–4. Governor Stephen Miran preferred a quarter-point cut. Beth Hammack, Neel Kashkari and Lorie Logan supported holding rates but opposed including an easing bias in the statement, in other words they did not want the statement to suggest that the next move would be a cut. Several outlets noted it was the most dissents at a single meeting since 1992. It was also Jerome Powell's last meeting as chair; his term ends on 15 May, and Kevin Warsh has been nominated to succeed him.

The statement said that "inflation is elevated, in part reflecting the recent increase in global energy prices" and that developments in the Middle East were contributing to a high level of uncertainty about the outlook.

The Bank of Canada also announced its decision on Wednesday, and German and Spanish flash inflation figures for April were published. Gold fell to a one-month low on Wednesday, according to Reuters reporting carried by Dawn.

Thursday 30 April: oil spikes, Japan intervenes, ECB and BoE hold

Thursday packed a month of news into one session.

Oil. Brent hit $126.41 a barrel, its highest since 9 March 2022, after Axios reported that President Trump was due to be briefed on plans for a series of military strikes on Iran. The June Brent contract expired that day, which exaggerated the moves in the front month. By late afternoon in London the expiring contract was at $114.07, down 3.36% on the day, and the more active July contract was at $109.98, according to Khaleej Times' Reuters-based report. Only about seven ships had crossed the Strait of Hormuz in 24 hours, compared with 125 to 140 a day before the war.

The yen. USD/JPY reached 160.7, the yen's weakest level since July 2024. Two sources told Reuters that Japanese authorities then bought yen. The pair dropped to 155.49 before recovering part of the move. Bank of Japan money-market data suggested up to 5.48 trillion yen, roughly $35 billion, may have been spent, just below the $36.8 billion spent in July 2024.

The ECB. The European Central Bank kept its deposit facility rate at 2.00%, its main refinancing rate at 2.15% and its marginal lending rate at 2.40%, as expected. Reuters reported that it signalled it could start raising rates as soon as June. The same morning Eurostat's flash estimate showed euro area inflation rising to 3.0% in April from 2.6% in March, matching forecasts, with energy prices up 10.9% on the year. Core inflation eased to 2.2% from 2.3%.

The Bank of England. The Monetary Policy Committee voted 8–1 to hold Bank Rate at 3.75%, with one member preferring an increase to 4%. Trading Economics' summary of the decision notes that the Bank expected CPI inflation, at 3.3%, to climb further later in the year as energy costs pass through.

US data. The advance estimate of first-quarter GDP showed growth at a 2.0% annualised rate, up from 0.5% in the fourth quarter. The March PCE price index rose 0.7% on the month and 3.5% on the year; core PCE rose 0.3% and 3.2%, according to the Bureau of Economic Analysis.

Friday 1 May: holiday-thin and wary of Japan

With many European markets shut for Labour Day and Japan in its Golden Week holiday period, Friday was thin. Reuters reported the dollar heading for its biggest weekly loss against the yen since February. Japan's top currency diplomat, Atsushi Mimura, said speculative positions were still evident, and Barclays flagged a risk of further intervention during Golden Week if the pair rebounded sharply towards 160. The US ISM manufacturing survey was the main afternoon release. USD/JPY closed at 157.06.

Pair by pair

USD/JPY: −1.46%

From 159.38 to 157.06, via a high of 160.7 and a low of 155.49. That is more than five yen of range in a single week, almost all of it on Thursday. For most of the year the pair has been held up by the gap between US and Japanese interest rates and by Japan's energy import bill. Intervention does not change either of those; it changes the risk of holding the position. Traders who are long USD/JPY now know that the authorities are willing to act near 160, so they demand more compensation for standing in the way.

EUR/USD: −0.01%

From 1.1722 to 1.1721. Reuters had the euro flat at 1.1721 on Friday, heading for a second straight weekly gain on its measure. An ECB openly discussing a June hike should, on paper, support the euro, but a record-level oil shock is a direct hit to the euro area's terms of trade, and the Fed was also leaning hawkish. The two forces cancelled out.

GBP/USD: +0.32%

From 1.3533 to 1.3576. The Bank of England's 8–1 vote, with the dissent in favour of a hike, was a mild support. Sterling has held up better than the euro in recent weeks, consistent with UK services inflation running above 4%.

AUD/USD: +0.77%

From 0.7151 to 0.7206. The Reserve Bank of Australia meets on Tuesday 5 May, and markets were preparing for the possibility of another hike. A central bank expected to raise rates while others hold tends to see its currency supported.

Gold: down about 1.8%

Reuters reporting carried by Dawn put spot gold at $4,620.57 early on Friday, down about 1.8% for the week, with higher oil prices fuelling inflation worries and expectations that rates would stay high for longer. Gold had touched a one-month low on Wednesday.

What is currency intervention, and why did it work only partly?

Currency intervention is when a government or central bank buys or sells its own currency in the market to change the exchange rate. In Japan, the Ministry of Finance makes the decision and the Bank of Japan carries out the trades. To support the yen, Japan sells some of its foreign reserves (mainly dollars) and buys yen.

Intervention works best when it surprises the market and when it goes with the fundamentals. Thursday's action certainly surprised: the pair fell more than five yen in hours. But the fundamentals were not on Japan's side. US rates were still far above Japanese rates, the Fed had just leaned hawkish, and oil was at a four-year high. That is why USD/JPY bounced back above 157 by Friday.

For traders, the practical consequences are about risk, not direction:

• Moves can be enormous and sudden. A five-yen fall in USD/JPY is roughly a 3% move. As an illustrative example, a one standard lot long position (100,000 dollars of notional) loses about 640 dollars per yen at a rate near 157, so a five-yen drop costs over 3,000 dollars. Our guide to lot sizes and position sizing shows how to work out pip values on yen pairs.
• Stops can slip. In a fast move, liquidity thins and your stop is filled at the next available price. See slippage explained.
• Margin can disappear quickly. A large position with little spare margin can hit your broker's stop-out level before you can react. Our guide to margin calls and stop-outs walks through exactly when that happens. Under ESMA rules your broker must close positions when margin falls to 50% of the requirement, and retail accounts have negative balance protection, but a loss up to your entire balance is still possible. Sudden gaps like Thursday's are one of the reasons most retail CFD traders lose money: brokers' published disclosures commonly show between about 61% and 89% of retail accounts losing.

The hawkish hold, explained

All four central banks held rates this week, yet all four leaned hawkish. What does that mean?

A central bank can change policy without changing its rate, by changing what it says about the future. The Fed had three members objecting to language implying the next move would be a cut. The ECB signalled a possible hike in June. The BoE had a vote for a hike. The BoJ had three votes for one. In each case the message was that the next move is more likely to be up than down.

Currency markets trade expectations, not current settings. If every central bank becomes more hawkish at once, the relative effect on exchange rates can be small, which is part of why EUR/USD ended the week flat. Our guide to central banks and interest rates explains forward guidance and why markets react to the vote split as much as to the decision.

Reading inflation through an oil shock

The inflation numbers this week all told the same story. US PCE inflation was 3.5%, with core at 3.2%. Euro area inflation was 3.0%, with core at 2.2% and energy up 10.9%. UK CPI was 3.3%. The gap between headline and core shows how much of the inflation is coming from energy.

That gap matters for policy. Central banks can, in theory, look through a temporary energy shock. But the longer it lasts, the greater the risk that it feeds into wages and other prices, and the less patient they can afford to be. That is the debate that produced this week's split votes. Our guide to how economic data moves forex explains how traders compare actual numbers with consensus and previous readings.

What this week teaches

• A hold is not a non-event. Votes, statement wording and press conferences can move a currency even when the rate is unchanged.
• Intervention changes risk more than direction. Japan's action knocked five yen off USD/JPY, but the pair bounced as the fundamentals had not changed.
• Watch for contract expiries in commodities. Brent's spike to $126 happened on the day the June contract expired. Front-month prices can be distorted around expiry.
• Holiday trading is thin. Labour Day and Golden Week reduced liquidity, which can exaggerate moves.
• Everyone hawkish can mean nothing moves. When all central banks lean the same way, relative effects on exchange rates can be small.

Scheduled next week (4–8 May)

Events only, no expectations about outcomes. Japan's Golden Week holidays continue to Wednesday 6 May, and the UK is closed for the early May bank holiday on Monday 4 May.

• Monday 4 May: UK markets closed for the bank holiday.
• Tuesday 5 May: Reserve Bank of Australia policy decision.
• During the week: US ISM services and JOLTS job openings; Norges Bank and Riksbank decisions; US ADP employment; Swiss CPI; German factory orders and industrial production; the US Treasury's quarterly refunding announcement; UK local elections on Thursday 7 May.
• Friday 8 May: US jobs report for April; Canadian jobs report; University of Michigan sentiment (preliminary).
• Throughout: the US blockade of Iranian ports remains in place, and the ceasefire has no expiry date.

Sources

• Federal Reserve: FOMC statement, 29 April 2026
• MarketScreener (Reuters): Yen steadies after Japan intervention, traders brace for more action
• Daily Sabah: BOJ keeps interest rates steady, lifts inflation forecast
• Banco de España: ECB keeps interest rates unchanged in April
• Trading Economics: BoE holds rates amid Iran risks
• RTTNews: Eurozone inflation accelerates as expected
• Bureau of Economic Analysis: Personal income and outlays, March 2026
• Türkiye Ministry of Trade: US GDP increased by 2.0% in first quarter of 2026 (BEA advance estimate)
• Khaleej Times (Reuters): Oil retreats after hitting four-year high
• Dawn (Reuters): Gold heads for weekly loss on oil-driven inflation concerns
• RTTNews: Dollar slipped further last week despite strong jobs data (includes 1 May closing levels)
• Newsquawk weekly economic calendar, 27 April–1 May 2026
• Newsquawk calendar of key events, May 2026