Ethereum strengthens as expectations of a restrictive Federal Reserve ease

Ethereum rose 5.46% to $1,696 as weaker US payrolls and easing inflation-risk commentary reduced expectations of near-term Federal Reserve tightening. Markets shifted rate-hike expectations from September to October, improving appetite for crypto assets.

By Daniel Mejía

Ethereum rebounded 5.46% to $1,696 as softer US labour data reduced near-term hawkish Fed expectations.
US payrolls rose just 57K in June, below 110K forecasts, while unemployment fell to 4.2% on mixed labour signals.
Fed hike expectations shifted to October, with markets pricing a 45.9% chance of a 25 bp increase.

Ethereum rebounds on lower expectations of a hawkish Federal Reserve

Ethereum rebounded sharply by 5.46% to $1,696, supported by reduced expectations that the Federal Reserve will adopt a more restrictive monetary-policy stance in the near term. The shift in market sentiment followed a weaker-than-expected US employment report, which showed a significant slowdown in job creation despite a modest decline in the unemployment rate.

According to data released by the US Bureau of Labor Statistics (BLS), non-farm payrolls increased by 57,000 in June, down from a revised 129,000 in May and well below analysts' expectations of approximately 110,000. The June figure represented the weakest pace of job creation since February 2026, signalling a moderation in labour-market momentum. At the same time, the unemployment rate declined from 4.3% to 4.2%, below market expectations for an unchanged reading.

Consequently, the CME FedWatch Tool reflected a reassessment of interest-rate expectations. Market-implied probabilities indicated that a 25-basis-point rate hike at the October Federal Reserve meeting had become the most likely outcome, with a probability of 45.9%. This represented a shift from previous expectations that a rate increase could occur as early as September, suggesting that investors assigned greater importance to the slowdown in payroll growth than to the modest decline in the unemployment rate.

Additionally, during the European Central Bank's annual forum in Sintra, Portugal, Federal Reserve Chair Kevin Warsh stated that inflation expectations and inflation risks had eased in recent weeks, while reiterating the central bank's commitment to returning inflation to its 2% target. At the same time, Warsh declined to provide forward guidance on future interest-rate decisions, emphasising that policy would remain dependent on incoming data.

Taken together, easing inflation risks and signs of moderation in the labour market may reduce the urgency for additional near-term monetary tightening. This environment tends to support higher-risk assets, including cryptocurrencies, as investors become more willing to increase exposure to growth-oriented and speculative markets.

Technical analysis of Ethereum

From a technical perspective, Ethereum maintains a downward trajectory. A more detailed assessment of the current market structure reveals several key observations:

Resistance levels: Should the immediate resistance levels of $1,800 and $2,000 be breached to the upside, the primary technical ceiling is identified at $2,300—a level that converges with the 200 SMA. Reclaiming this structural pivot point would be relevant for recovering upward momentum.
Support levels: If the long-term structural support at $1,500 is breached, the next critical floor lies at the $1,000 mark—a prominent psychological zone. A sustained close below this threshold would likely intensify selling pressure and significantly increase the probability of a deeper market correction.
Momentum indicators: The Moving Average Convergence Divergence (MACD) indicates a bullish divergence, implying possible short-term price strengthening. At the same time, the Relative Strength Index (RSI) is hovering close to oversold levels, signalling that bullish momentum may re-emerge. Nevertheless, macroeconomic and geopolitical developments are expected to continue shaping Ethereum’s forward path.