Crypto News- Contrary to prevailing bearish sentiments surrounding the US Dollar, the DXY has surged to its highest level in almost a year, potentially entering a consolidation phase. This development could have significant ramifications for both broader financial markets and the cryptocurrency sector, even though historical correlations between the DXY and BTC have been inversely related.
DXY Reaches Yearly High, but Michael Saylor Finds Bitcoin (BTC) a Lifesaver
In September 2022, the US Dollar index peaked at 114.8, only to later break down from the parabolic support line (depicted in blue) and commence a downtrend, reaching 99.5 by July 2023. However, come August, the DXY broke free from the descending downtrend line (indicated in black), marking the inception of a medium-term uptrend. This shift culminated in a new one-year high at 106.5 and the first higher high in nearly twelve months. Notably, the US Dollar closed several daily candles above the pivotal resistance level at 105.5. The validation of this resistance as support will be crucial to sustain the uptrend.
In the event of a deeper correction, the 104 level, corresponding to the 0.382 Fibonacci retracement, is expected to provide support, aligning with the previous swing high from May 2023. Should the DXY maintain its upward trajectory, the next resistance zone to watch is at 108.5, which corresponds to the long-term 0.236 Fibonacci retracement. This level had been breached during the previous year’s breakdown from a parabolic uptrend and the initiation of a downtrend.
Respected cryptocurrency analyst @Negentropic_ also analyzed the US Dollar chart and suggested that the DXY needs to “cool down.” He highlighted the breakout above the descending resistance line, which slightly differs in trajectory on his chart. Interestingly, the analyst expressed optimism about the US Dollar index’s rise and its potential implications for the cryptocurrency market, including Bitcoin.
The long-term chart clearly illustrates a negative correlation between the DXY and BTC.
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