• XRP trades amid renewed headwinds, raising the odds of an extended sell-off toward the $1.00 pivotal support level.
• Demand for derivatives returns, with perpetual futures Open Interest climbing to 2.35 billion XRP.
• XRP reserves on Binance edge lower at 2.60 billion XRP, suggesting reduced near-term sell-side liquidity.

Ripple (XRP) continues to trade under increasing pressure on Tuesday. This marks the second consecutive day of declines, reflecting broader risk-off sentiment as investors appear to shift gears in anticipation of the Federal Reserve (Fed) interest rate decision.

Fed rate decision weighs on risk assets

On Wednesday, the Federal Open Market Committee (FOMC) is widely expected to leave interest rates unchanged in the 3.50%-3.75% range. However, the market is pricing in a 36% chance of a rate hike, which could weigh on risk assets.

According to Loretta Mester, former Cleveland Fed President, central bank officials “are going to have to ask themselves whether policy is at the right level to get inflation moving back down to 2%. Chair Warsh has been pretty vocal on saying that they’re not going to tolerate inflation.”

XRP renews retail demand as exchange reserves shrink

Demand for XRP derivatives remains elevated, as futures Open Interest (OI) climbs to 2.25 billion XRP on Tuesday, from 2.22 billion the previous day. If the spike is not an outlier, sustained demand could offset the prevailing selling pressure and stabilize the token ahead of another breakout attempt.

Meanwhile, the balance of XRP reserves on the Binance exchange continues to decline, standing at 2.60 billion XRP as of Monday, down from  2.61 billion the day before. A wider scope highlights a sustained downtrend in supply on the platform, given the 2.71 billion XRP on June 1. Notably, declining reserves imply investors are moving coins off exchanges, resulting in less immediate sell-side pressure.

Technical outlook: XRP bears retain control

XRP trades around $1.05, maintaining a bearish near-term bias as price holds beneath the Bollinger Band middle layer at near $1.10 and well under the 50-day, 100-day and 200-day Exponential Moving Averages (EMAs) at $1.13, $1.22 and $1.42 respectively.

Momentum corroborates the heavy tone, with the Relative Strength Index (RSI) hovering around 39, below the midline on the daily chart, while the Moving Average Convergence Divergence (MACD) histogram has slipped slightly into negative territory, hinting that recent rebounds lack follow-through.

On the downside, immediate support is aligned with the lower Bollinger band near $1.05. A decisive break lower would expose further weakness beyond the band and reinforce the current downleg. On the topside, initial resistance lies at the Bollinger Band middle layer at $1.10, followed by the 50-day EMA near $1.13, while more substantial supply is anticipated higher up at the 100-day EMA around $1.22 and the 200-day EMA near $1.42, levels that would need to be reclaimed to challenge the prevailing bearish structure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)