Ethereum price edged higher on Wednesday amid its Shapella upgrade and the latest US CPI data release. At press time, ETH was trading slightly higher at $1,900, following an intraday high of $1,933. Ethereum, the largest altcoin by market cap, has jumped nearly 3% in the past week and 59.94% in the year to date.
Fundamentals
Ethereum price has been hovering around its highest level since August for the past few days ahead of the long-awaited Shanghai upgrade set to launch later in the day. The upgrade is set to introduce new enhancements such as reduced gas fees, ETH validator withdrawal, and improved security. Many have predicted that the event will impose selling pressure on the Ethereum price, while others say that this is the impetus the altcoin needs to regain institutional interest.
Markets have been reacting to the latest US inflation data released earlier in the day. Data by the Bureau of Labor Statistics show that the Consumer Price Index (CPI) increased by 0.1% in March, down from 0.4% in February and lower than the 0.2% forecast by analysts. In the 12 months through March, the CPI climbed by 5.0%, down from 6.0% in February.
The decline in inflation raised hopes that the Federal Reserve would end or put a pause in its interest rate hike cycle. FOMC’s latest meeting minutes suggested that the federal funds rate would reach a peak in May 2023 and that the target range would then move lower. The median respondent expected the Summary of Economic Projections (SEP) projections for the federal funds rate at the end of 2023 and 2024 to shift 25 basis points higher.
US Treasury yields dipped on Wednesday amid rumors that the Fed would ease its interest rate hikes. The yield on the benchmark 10-year Treasury yield slipped to 3.407%, while the 2-year Treasury bond dropped to 3.974%. The US dollar index also inched lower off the back of the recent CPI reading.
Ethereum Price Outlook
Ethereum price has been hovering around the $1,900 level for the past few days, its highest level since August. On the daily chart, ETH has managed to remain above the 25-week and 50-week moving averages, as well as the 50-day and 200-day exponential moving averages. Its RSI is at 61, while the Moving Average Convergence Divergence indicator remains bullish.
Therefore, the launch of the Shanghai upgrade is likely to pump liquidity into ETH, pumping the Ethereum price higher. if this happens, buyers will be eyeing the next resistance levels at $2,000 and $2,478. However, a move below the crucial support level at $1,805.40 will invalidate the bullish thesis.
