The dollar falls following a shock in the labor market
In detail, the U.S. Dollar Index (DXY), which measures the strength of the dollar against a basket of six foreign currencies, including the euro and the pound, hit 94.50 on Thursday for the first time since on Sept. 28, 2020. But he backed down on news of the increase in jobless claims in the United States against declining forecasts.
Social data released Thursday showed that the number of jobless claims rose to 362,000 last week from 351,000 a week earlier and against economists’ projection of 333,000. As a result, the number of new claims s ‘is stuck at around 2.8 million for five consecutive weeks.
For markets, this could mean that the Federal Reserve could delay cutting its $ 120 billion asset purchase program from November to a month later, thus keeping interest rates lower and resurgent. temporary dollar strength.
The index was trading at 94.263 at the time of writing.
Technical outlook sees Bitcoin rising and dollar falling
Technical data also showed that the greenback faces the prospect of a correction ahead. For example, independent market analyst TradingShot spotted the dollar index inside a megaphone pattern, which is about to be completed to continue a correction over the next few sessions, as shown. the graph below.
“Based on the 1D Relative Strength Index (RSI) it looks like DXY is right at the top of the formation as [it was] August 15, 2018, ”TradingShot wrote.
“DXY builds a strong recoil down from the megaphone. “
Meanwhile, a recent episode of selling in the Bitcoin market caused him to paint a descending wedge pattern. In detail, descending wedges appear when price trends fall within a channel comprising two diverging and descending trend lines.
Mainstream analysts see the descending wedge pattern as an indicator of a bullish reversal, noting that a break above its upper trendline pushes the price up to the maximum distance between the wedge’s trendlines.
The maximum height of the structure is approximately $ 10,000. As a result, the price of Bitcoin can at least retest $ 50,000 if the coin breakout goes as expected.
A weaker dollar means a stronger Bitcoin
On the flip side, the disappointing jobs report could boost investors’ temporary appetite for Bitcoin.
Related: Bitcoin’s Sharp $ 50,000 Drop Tied to Stronger US Dollar, Gold – Correlation Shows
Vasja Zupan, president of Matrix Exchange, told Cointelegraph that the weakness and devaluation of the dollar in the face of rising inflation will continue to encourage investors to place their excess liquidity in the crypto markets. He said:
“Bitcoin in its basic proposition has a built-in hedge against inflation and therefore ever higher inflation in the United States can only push it higher. Therefore, in the long run, the value of the dollar will continue to be lower than that of Bitcoin. “
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