Ethereum advances 1% following Fed hold, with Coinbase Premium still negative

Ethereum trades at $2,350 today

• With the Fed keeping interest rates at 3.75-4.00%, Ethereum inches above $2,350.
• The Coinbase Premium Index falls to its lowest reading since February as US selling pressure persists.
• Following a rebound from the 200-day EMA, ETH challenges resistance at $2,355.

Following the Federal Reserve's (Fed) decision to keep interest rates unchanged, Ethereum (ETH) stages a modest recovery to just above $2,350 on Wednesday.

ETH edges higher following Fed rate hold

By a 10-2 vote, the Federal Open Market Committee (FOMC) kept rates at 3.75-4.00%. It pointed to strong growth in economic activity despite heightened geopolitical uncertainty. With inflation still elevated, the Committee said it would evaluate incoming data to establish the policy stance needed to return inflation to its 2% target. The decision comes after a 25-basis-point rate increase in September.

Attention in markets now turns to Thursday's Personal Consumption Expenditures (PCE) report, the inflation measure favoured by the Fed.

Although the CME FedWatch tool showed markets had assigned the Fed's decision a probability of over 90%, ETH initially responded positively, gaining 1% to trade above $2,350.

US risk aversion keeps ETH under pressure

Beyond the immediate reaction, persistent selling by US investors continues to weigh on ETH.

At -0.181 on Monday, the Coinbase Premium Index reached its lowest reading since February, before edging up to -0.142 on Tuesday. The index tracks the gap between ETH prices on Coinbase Pro and Binance. Negative readings have persisted since early September, indicating that selling pressure from US-based investors outweighs that from investors in other regions.

Outflows also persisted from US spot ETH exchange-traded funds (ETFs). SoSoValue data showed net withdrawals of $60.2 million on Tuesday, marking a second successive day of outflows. Should withdrawals persist, ETH ETFs could suffer their worst month since their July 2024 launch.

Ethereum technical outlook: ETH challenges $2,355 following rebound from 200-day EMA

Coinglass data put Ethereum liquidations over the past 24 hours at $43.1 million, with short positions accounting for the largest share at $36 million.

After rebounding from the 200-day Exponential Moving Average (EMA) at $2,316, the leading altcoin is challenging resistance at $2,355. The 100-day EMA at $2,362 reinforces this barrier. A break higher would bring the $2,411 horizontal level into view, ahead of the 20-day and 50-day EMAs at $2,424 and $2,450. ETH must overcome those averages before confronting key resistance at $2,548.

Support remains intact at the 200-day EMA. Below it, further downside protection lies at $2,256, $2,204, and $2,107.

After the Stochastic reached oversold territory, it and the Relative Strength Index (RSI) moved away from their lows, with the RSI at 39 and the Stochastic at 33.