Ethereum slips further post-US CPI as risk aversion deepens

Ethereum fell sharply on yesterday after the release of the hotter-than-expected US Core CPI, with a broader risk-off mood in the crypto market adding to the selling pressure.

However, the modest shifts in rate hike expectations and the dovish adjustments at the longer end of the curve indicate that markets may be growing more worried about the economic growth prospects.

Should weaker economic data validate these concerns, Ethereum could continue to face headwinds, as traders are expected to cut back on riskier assets such as cryptocurrencies.

On a positive note, Interactive Brokers introduced Ethereum staking for qualified US clients on October 13, expanding the availability of staking rewards. Separately, Ethereum's Glamsterdam upgrade is advancing through testnet development, aiming to boost network capacity and enhance transaction processing. However, these are long-term developments and are unlikely to counterbalance the macro-driven negatives in the near term.

Looking forward, potential catalysts include Flash PMIs, the Federal Open Market Committee meeting, US-Iran talks, and the US midterm elections. Weakening economic data could heighten growth concerns, further dampening risk sentiment and pressuring Ethereum.

A complete shift in the outlook could come from an end to the US-Iran war, which would reduce inflationary pressures, improve the growth outlook, and likely fuel a broader recovery in risk assets, including Ethereum.

Ethereum Technical Analysis – Daily Timeframe

Ethereum is trading near key support at 2,360 and the major trendline. Dip-buyers are expected to step in around these levels, with risk defined below the trendline, aiming for a rally toward 3,400. Sellers need a break below the trendline to open the path to new lows and target 1,900.

Ethereum Technical Analysis – 4 Hour Timeframe

Since the price formed a new lower low on the 4-hour timeframe, a downward trendline now defines the bearish momentum. A pullback to this trendline would likely attract sellers, with risk above it, as they seek a break below the major upward trendline. Buyers, conversely, want a break higher to increase bullish bets toward new highs, with 2,570 as the initial target.

Ethereum Technical Analysis – 1 Hour Timeframe

On the 1-hour timeframe, the price broke below the narrow range yesterday after the US CPI release and extended losses as more sellers entered, targeting the 2,360 support and the trendline. Buyers have a better risk-to-reward around the support and the major upward trendline, while sellers need a break below the upward trendline for new lows. The red lines indicate an average daily range for today.

Upcoming Catalysts

Upcoming catalysts include the US Producer Price Index, US Retail Sales and the latest US Jobless Claims figures. Additionally, Federal Reserve Chair Warsh is scheduled to speak late in a fireside chat with IMF Managing Director Georgieva. Given his opposition to guidance, he is unlikely to provide any policy signals, but the event is worth monitoring.