Ethereum bounces back as Middle East tensions ease, but macro pressures persist

Ethereum recently fell through important technical thresholds as worries about possible US military action against Iran dampened cryptocurrency sentiment. Those concerns did not materialise, and a broader recovery in risk appetite has emerged alongside lower oil prices.

Looking at the wider picture, the situation remains unchanged. The ongoing Middle East crisis continues to fuel inflation concerns and weighs on global economic growth. The Federal Reserve is maintaining a tightening stance, and the upcoming midterm elections inject further unpredictability. These adverse factors are expected to cap any sustained Ethereum rallies.

Market participants will focus on the Federal Open Market Committee decision due Wednesday and Middle East events this week.

The central bank is broadly anticipated to hold interest rates steady, meaning a surprise increase could spark a sharp Ethereum selloff. No Dot Plot will be released at this meeting, so attention will centre on Fed Chair Warsh. Given his usual reluctance to offer forward guidance, he is not expected to say much, though traders will watch for any hawkish signals.

ETHEREUM TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, Ethereum broke beneath the key upward trendline and the 2,360 support level, paving the way for a drop toward 1,900. Sellers are expected to keep entering near these levels with a defined risk above the downward trendline, aiming for the 1,900 area. Buyers, meanwhile, would need a close above the downward trendline to start targeting a rally to 3,400, with 2,800 as an initial goal.

ETHEREUM TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

The 4-hour chart shows the price consolidating beneath the broken support. Another retest could prompt sellers to step in with a defined risk above that level, aiming for new lows. Buyers would look for a move higher to extend the pullback toward the downward trendline.

ETHEREUM TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1-hour chart, little additional insight is available. Sellers have a better risk-reward setup around the broken support, while buyers need a breakout to position for new highs. The red lines mark today's average daily range.

UPCOMING CATALYSTS

Tuesday brings the US Consumer Confidence report. Wednesday features the FOMC rate decision. Thursday includes the US GDP report, the US PCE data and the latest US Jobless Claims figures. Friday wraps up the week with the US Employment Cost Index.