Ethereum Upbeat Despite Hawkish FOMC Accounts
ETH/USD Analysis
The popular altcoin is resilient to the recent surge in the USDOLLAR, due the repricing in market expectations around the Fed's policy. After blockbuster jobs report, higher than expected CPI inflation last week and persistent hawkish rhetoric, CME's FedWatch Tool assigns the highest probability to rates peaking at 5.5%, suggesting another 75 basis points worth of hikes.[1]
Yesterday's accounts of the Fed's last policy meeting, showed that "a few participants" had supported a bigger increase in that meeting, than the 0.25% one delivered. Although we already knew about two non-voting members who had advocated for that, the wording of the minutes suggest that maybe there were more. [2]
The accounts were overall hawkish, reaffirming the Fed's resolve to bring down inflation, the higher-for-longer narrative and the heightened market expectations. They did not provide any surprise or anything overly aggressive though, with markets probably heaving a sigh of relief.
ETH/USD brushed of the hawkish tone of Wednesday's minutes and rebounds after the poor performance of the previous days, maintaining the bullish bias above the EMA200. It is on track for new highs (1,745), but we are cautious about further strength that would tackle 2,015.
However, the renewed regulatory scrutiny of the crypto industry can put pressure on digital assets and ETH/USD is in risk of a return towards 1,460. However, the downside seems well protected and weakness sustained below 1,350-30 does not look easy at this stage.
Market participants now brace for Fridays PCE inflation update, that can determine the trajectory of Ethereum.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 22 Feb 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html | |
| Retrieved 09 Jun 2023 https://www.federalreserve.gov/monetarypolicy/fomcminutes20230201.htm |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.