Ethereum slipped 0.7% on Friday after hotter US producer inflation data lifted expectations of tighter Federal Reserve policy. The token is testing support near $2,431 and its 20-day moving average around $2,405, while ETF inflows and retail selling send mixed signals on demand.
Ethereum (ETH) traded 0.7% lower on Friday as it tried to recover from selling pressure triggered by stronger US producer inflation data. The hotter reading raised expectations of tighter Federal Reserve policy, a difficult backdrop for risk assets.
It remains above its major moving averages, but retail selling, hesitant derivatives traders, and slowing institutional demand could limit its near-term recovery.
US producer inflation accelerates to 5.4%
The US Producer Price Index for final demand rose 0.4% in August, matching expectations after a revised 0.1% gain in July. On an annual basis, producer inflation accelerated to 5.4% from 4.8%, with energy prices rising 4.2% amid higher oil prices.
That data preceded Friday's Consumer Price Index report, another potential catalyst ahead of the Federal Reserve's September 15–16 meeting. Polymarket traders assigned a 62% probability to an interest-rate increase at that meeting, with the odds of a hike by October at 71%. Markets also increasingly expect Fed Chair Kevin Warsh to open his tenure with a rate increase, a sharp shift from earlier expectations.
Higher rates could pressure Ethereum by tightening financial conditions and increasing the appeal of interest-bearing assets. They could also discourage the leveraged trading that often fuels crypto rallies.
Despite the tougher backdrop, US spot Ethereum ETFs registered $34.75 million in net inflows on Wednesday, offsetting $24 million withdrawn on Tuesday. Weekly ETF demand has slowed, though: the products attracted $218.4 million last week, down sharply from the yearly high of $824 million the week before.
Retail investors sold a combined 307,000 ETH last week, significantly exceeding the 82,000 ETH accumulated by whales. Persistent retail distribution could increase available supply and limit attempts to push the price higher.
Ethereum tests $2,431 support and its 20-day EMA
Ethereum is testing horizontal support near $2,431 and its 20-day exponential moving average around $2,405. Despite the pullback, ETH remains above its 50-, 100-, and 200-day EMAs, clustered between roughly $2,223 and $2,256, keeping the broader uptrend intact.
The Relative Strength Index stands near 59, a modest bullish tilt that shows momentum has cooled. If Ethereum rebounds, its first major resistance sits near $2,545; a close above that level could open the next barriers at $2,626 and $2,787.
Losing $2,405 and $2,431 would shift attention to the moving-average support cluster between $2,223 and $2,256. Further support lies at $2,172, with broader trend floors at $1,961 and $1,810.
Source: CoinJournal
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