Cryptocurrency markets are bracing for a week of significant macroeconomic catalysts, with traders closely monitoring Federal Reserve policy signals and key inflation data. While the Fed's recent decision to hold interest rates steady was widely anticipated, the accompanying economic projections have introduced a more cautious tone into the market. Policymakers have adjusted their outlook, now forecasting weaker economic growth and more persistent inflation for the year. This delicate balance between managing inflation and avoiding a sharp economic downturn creates a complex backdrop for risk assets like Bitcoin (BTC) and Ethereum (ETH).

Bitcoin is currently navigating this uncertain environment with notable price action. The BTCUSDT pair is trading at approximately $106,495, reflecting a 1.06% decline over the past 24 hours. The trading range has been defined between a low of $106,299 and a high of $107,814, levels that now serve as critical short-term support and resistance, respectively. A decisive break below the $106,300 support could signal further downside pressure, while reclaiming the $107,800 level would be a bullish sign. The relatively low 24-hour volume of around 7.3 BTC on this pair suggests that many traders may be waiting on the sidelines for clearer directional signals from the macro landscape.

Powell's Testimony and Inflation Data in Focus

The main event for the week will undoubtedly be Federal Reserve Chairman Jerome Powell's semi-annual monetary policy testimony before Congress. According to The Kobeissi Letter, Powell is expected to maintain a data-dependent stance while facing questions about the timing of potential rate cuts. Any dovish undertones in his remarks could invigorate risk appetite across financial markets, providing a potential tailwind for cryptocurrencies. Chris Weston, head of research at Pepperstone, noted on X that emerging cracks in the labor market and weak housing activity could justify a more dovish pivot from the Fed, potentially guiding towards a rate cut later in the year. Such a shift would likely weaken the dollar and increase the appeal of assets like BTC and gold as alternative stores of value.

PCE Inflation: The Deciding Factor?

Adding another layer of importance to the week is the release of the core Personal Consumption Expenditures (PCE) price index, the Fed's preferred gauge of inflation. The market consensus, as reported by Pepperstone, is for a mild 0.1% month-on-month increase, which would support the case for impending rate cuts. However, analysts at ING have offered a more cautious perspective, suggesting that the full inflationary impact of trade tariffs may not be felt until later in the year. They argue that clarity on the inflation trajectory might not emerge until the December FOMC meeting, potentially limiting the Fed to just one rate cut this year. A hotter-than-expected PCE print would likely delay rate cut expectations, putting downward pressure on BTC and the broader crypto market. Conversely, a soft reading could see Bitcoin challenge its recent highs.

Beyond Bitcoin, the altcoin market is presenting a mixed picture. Ethereum (ETH) is trading at $2,440, down about 1%, mirroring Bitcoin's slight downturn. Its 24-hour range is between $2,436 and $2,521. The ETHBTC pair, a key indicator of Ethereum's strength relative to Bitcoin, has slipped by 0.43% to 0.02295, suggesting Bitcoin is currently showing more resilience. In contrast, some altcoins are showing pockets of strength. Avalanche (AVAX) has been a notable outperformer against Bitcoin, with the AVAXBTC pair surging 6.73% to 0.0002267. Solana (SOL) is trading lower at $148.28, down 1.12%, but its performance against Ethereum, with the SOLETH pair up 2.59%, indicates shifting dynamics within the Layer-1 ecosystem. Traders will be watching these cross-pairs closely to identify relative strength and potential rotation opportunities as the market digests the week's macro events.