The US dollar began to recover from multi-year support levels. At the same time, fell the prices of Bitcoin (BTC) and gold.
In addition, the warning from European Central Bank (ECB) The recovery of the dollar continues to catalyze against the appreciation of the euro.
The ECB is trying to weaken the euro as the dollar is just beginning to rebound
Bitcoin and gold prices react negatively to the rise in the dollar as markets value both assets against the dollar. When the dollar’s value increases, the value of BTC decreases relative to the dollar.
Since the dollar has risen since its monthly opening on September 1st, Bitcoin price fell from $ 12,086 to a low of $ 11,160. Gold has had a similar reaction down nearly 1.8% in the past two days.
Daily chart of the US dollar index with key values. Source: Dealer XO
Short term, Analysts generally expect dollar momentum to pick up. This week the ECB announced that it would offset the rise in the euro by controlling exports and promoting further monetary stimulus.
Currency analysts believe the ECB could continue to “cushion” the strength of the euro. Short term, that could do the dollar rallywhich could put the selling pressure on Bitcoin and Gold. MUFG analyst, Lee Hardmansaid:
“Overall, the comments suggest that an immediate policy response from the ECB to weaken the euro looks unlikely and they will rely more on jawbones for the time being to contain the strength of the euro.”
However, currency strategists predicted that the euro would fall against the dollar after an initial rally.. On a message to customers, the global macro strategist from Arkera, Viraj PatelHe said the euro was approaching the “pain threshold” of policy makers.
If the euro continues to recover, Patel suggested that a strong reaction from the ECB is likely. Since then, the ECB has issued several warnings about the rise of the euro.
It remains uncertain whether the trend towards the recovery of the dollar and the weakening of the euro will continue. There is a chance that both the euro and the dollar could fall at the same time.
Given the strength of the dollar rally Bitcoin traders are cautiously turning bearish.
What BTC traders believe will happen in the short term
according to Michael van de Poppe, a full time trader on the Amsterdam Stock Exchange, Bitcoin could fall to $ 11,600 if the $ 11,200 support levels apply.
Possible short-term Bitcoin price scenario. Source: Michael van de Poppe
More than a week since August 26th The $ 11,200 level served as an important area of support for Bitcoin. Poppe about it wrote::
“The first big pivot failed to break through, so we will test the lows again. If these hold -> another test and a possible rally towards USD 11,550-11,700. If it breaks down, I’d go for $ 10,600 to $ 10,800. “
The dealer XO, Trading in cryptocurrencies and currency markets, said the dollar had regained “huge” monthly levels. If the dollar index recovers to the next resistance above 94.5 points, could cause BTC momentum to slow down. XO tweeted::
“The daily bullish pin bar was printed on Tuesday and the price broke the downtrend channel. The price also rebounded at huge monthly levels. It will continue to look for short and long pairs of euro-dollars. As for BTC, no comments “.