U.S. CPI Report Tomorrow: Key Expectations, Ethereum and Bitcoin Price Impact

Markets are bracing for the upcoming U.S. Consumer Price Index (CPI) report, scheduled for release at 8:30 a.m. ET (13:30 GMT) on Tuesday, January 13. 

This major inflation report coincides with a period when the Federal Reserve policy direction and the stability of the leadership is uncertain. 

In the meantime, Ethereum and Bitcoin prices are responding cautiously to the expectation of the economic data, and there has been a hint of consolidation and possible breakout.

U.S. CPI to Remain Elevated at 2.7% as Fed Eyes Q1 Data

Economists and traders are projecting both headline and core U.S. CPI to land at 2.7% year-over-year for December. This would be the same as the headline inflation of last month, and an upward movement of core CPI, albeit to a lesser degree, of 2.6%.

Although inflation seems to be slowly decreasing in the paper, it is still higher than the Federal Reserve’s goal of 2% and so this is putting a strain on its monetary policy decisions.

The independence of the Fed has been more of an issue due to the reports that the Department of Justice subpoenaed Fed Chair Jerome Powell.

Even though this action will not have an immediate impact on policy, it will bring in a sense of uncertainty in the leadership of the central bank. The drastic decline in the inflation of Q1 is now regarded as a decisive point in any rate reduction.

Falling energy prices have failed to move core inflation. Core PCE is the preferred inflation measure by the Fed, which is released later; thus, U.S. CPI is an important early indicator to the market.

The latest predictions indicate that the inflation rate will not fall significantly soon, and that is so, as the disruptions in the supply chain caused by previous government shutdowns remain in effect.

Bitcoin Price Consolidates Below $95K as CPI Looms

Bitcoin (BTC) price continues to consolidate after its recent rebound stalled just under the $95,000 resistance zone.  At the time of reporting, BTC price is trading around $91,633, reflecting a 0.98% gain over the past 24 hours. 

However, a bearish breakdown below $88,000 could push the price toward $86,000 or even lower, with a stronger support zone near $80,000.

To the upside, regaining the $92,000 area and pushing past the $95,000 mark may lead to a challenge of the $100,000 level as per the full Bitcoin forecast report. The existing framework demonstrates an ascending wedge, which implies compression of prices.

Traders are also keeping a close lookout for a CPI surprise that may either lead to a breakout or further consolidation.

Ethereum Eyes $3,200 Recovery Amid Uncertain Momentum

Ethereum (ETH) price has remained range-bound over the past two months, trading between $2,600 and $3,350.  Currently, the Ether price is trading at around $3,120 with a slight increase of 1% over the past 24 hours and a minor loss in the past week. 

ETH has remained on an upward trendline since the December lows, which is a positive indication of strength in the short-term.

Bulls need to regain the $3,150 to $3,200 resistance zone to keep the momentum going. Any failure to retain this area would push Ethereum back to $3,000 or lower. 

On the positive side, the second significant resistance is just above the level of $3,800, and might be checked should the CPI data indicate a wider risk-on mood.

To sum up, as the market sentiment shifts to both sides, the fluctuations in the price of Bitcoin and Ethereum would probably continue to be related to the macroeconomic factors, such as the U.S. CPI level.