Crypto Analysts Sound Alarm as US Dollar Index Hits 2-Month High
The US Dollar Index (DXY) has rebounded because the Federal Reserve’s fee lower in September. Even as expectations develop for one more fee lower in October, the DXY reached its highest degree in two months.
This motion appears to contradict what many crypto market analysts had predicted. Why is that this occurring, and what affect may it have?
Why Is the DXY Rising Despite Fed Rate Cuts?
Normally, a Fed fee lower alerts potential dollar depreciation. Investors usually reply by looking for different belongings like gold or cryptocurrencies to protect worth.
However, knowledge reveals that because the mid-September rate cut, the DXY has climbed steadily from a low of 96.2 to 98.9 factors — its highest degree in two months.
Francesco Pesole, a international alternate strategist at ING, explained that the greenback’s power comes from political instability in France and Japan. This has weakened the euro and yen, which collectively make up 71% of the DXY basket.
Additionally, investor Tom Capital noted that Commodity Trading Advisors (CTAs) repurchasing the greenback have accelerated its restoration.
Analyst Axel Adler Jr. observed that the US authorities shutdown may need influenced the DXY’s rise in early October. The shutdown delayed financial knowledge releases and reduced discussions of additional fee cuts, creating favorable circumstances for a greenback rebound.
Market analyst The Great Martis predicted that the DXY’s restoration may proceed amid ongoing European political and financial uncertainty.
“As Europe faces extreme headwinds, authorities turmoil, bond erosion, and rising debt servicing obligations, the greenback index is poised to rise within the coming weeks,” The Great Martis predicted.
Impact on Bitcoin and the Crypto Market
Bitcoin’s latest decline has coincided with a restoration within the DXY index, highlighting the return of their inverse correlation.
From a technical standpoint, analysts highlighted two essential alerts. First, the DXY has reclaimed its 14-year assist trendline — a key long-term indicator. Second, the inverse head-and-shoulders sample has confirmed a possible development reversal from bearish to bullish.
Both alerts counsel the DXY could proceed to rise. If this uptrend persists by means of October, it could possibly be a headwind for Bitcoin, complicating its value motion this month.
“DXY remains to be pushing up. I’d not be catching any falling knives proper now on Bitcoin or crypto markets,” dealer ImNotTheWolf commented.
However, many buyers believe that the DXY’s rebound could solely put short-term pressure on Bitcoin. High expectations for an October rate cut and gold’s continuous record highs counsel that the US greenback stays removed from being a long-term funding precedence.
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