Ethereum trades lower, holds above key moving averages amid Fed rate hike bet

Key points

• The price of Ether fell 0.7% after annual U.S. producer inflation accelerated to 5.4%.
• Polymarket bettors put 62% odds on a rate increase at the next Federal Reserve meeting.
• ETH is testing support around $2,431 and $2,405, with resistance close to $2,545.

Ethereum changed hands 0.7% lower on Friday as it tried to bounce back from selling pressure set off by stronger-than-last-time U.S. producer inflation figures.

The hotter yearly inflation reading boosted expectations that the Federal Reserve will tighten policy further, creating a difficult backdrop for risk assets. Even though Ether remains above its key moving averages, selling by retail traders, hesitation among derivatives participants, and a slowdown in institutional buying could weigh on its short-term recovery.

U.S. producer inflation climbs to 5.4%

The Producer Price Index for final demand rose 0.4% in August, matching analysts' forecasts after a revised 0.1% gain in July.

Year over year, producer inflation picked up to 5.4% from 4.8%. Energy costs added significantly to the advance, climbing 4.2% as oil prices moved higher. Core producer prices, stripping out food and energy, also increased 0.4% over the month.

The release came before Friday's Consumer Price Index report, another event that could shift expectations for the Federal Reserve's September 15–16 meeting.

Data from prediction-market site Polymarket showed traders giving a 62% chance that the Fed will raise interest rates at its next meeting. The estimated probability of a hike by October stood at 71%.

Market participants now increasingly expect that Fed Chair Kevin Warsh will begin his term with a rate increase, a sharp turn from earlier policy views.

Higher rates could weigh on Ethereum by tightening financial conditions and making interest-bearing instruments more attractive. Rates could also discourage the leveraged trading and speculative activity that often fuel cryptocurrency rallies.

Despite the tough macroeconomic climate, U.S. spot Ethereum exchange-traded funds saw $34.75 million in net inflows on Wednesday.

The positive result erased the $24 million that left on Tuesday and showed that some institutional investors kept adding to their positions during Ether's two-week consolidation phase.

Still, weekly ETF demand has slowed. The products took in $218.4 million last week, down sharply from the $824 million high for the year recorded in the prior week.

The deceleration suggests institutional appetite remains positive but has lost steam.

Retail investors sold a combined 307,000 ETH last week, far more than the 82,000 ETH that whales accumulated.

That disparity shows that smaller holders have turned more cautious following Ethereum's late-August recovery. Sustained retail distribution could add to available supply and restrain efforts to lift the price.

Ethereum's price has also risen faster than futures open interest. The gap suggests that leveraged longs remain reluctant to commit significant fresh capital to the recovery.

Ethereum tests 20-day EMA and $2,431 support

Ether is testing horizontal support near $2,431 and its 20-day exponential moving average around $2,405.

Even with the pullback, ETH remains well above its 50-, 100-, and 200-day EMAs, which sit between roughly $2,223 and $2,256. That positioning preserves the larger uptrend.

The Relative Strength Index stands around 59, a slightly bullish reading while showing that momentum has cooled. The Stochastic Oscillator is also moving toward its midpoint, signaling moderation rather than a confirmed bearish turn.

If Ethereum bounces, the first significant resistance sits near $2,545. A decisive close above that level could open the next hurdles at $2,626 and $2,787.

On the downside, losing $2,405 and $2,431 would direct attention to the moving-average support zone between $2,223 and $2,256. Further support is at $2,172, followed by the broader trend floors at $1,961 and $1,810.

A run of daily closes above the overhead resistance levels would revive stronger bullish momentum and clear the path toward new local highs.