By Shelly Melancon (Switzerland)
US jobless claims witnessed a surge this week instigating huge sell-offs in the dollar market. On its part, Bitcoin retained its gains on the day. The flagship cryptocurrency managed to cross the $45k resistance zone earlier on Friday, October 1st.
The US Dollar is moving in the opposite direction after shedding a part of the huge momentum that caused it to achieve a year-high on Thursday. A close inverse comparison between the two assets indicates that a declining dollar would have the opposite effect on Bitcoin such that its price will be pushed higher.
US Dollar Index Reaches High Last Seen in Late 2020
The news of the labor market is reported to have triggered the weakening of the dollar. Using the US Dollar Index (DXY), the strength of the dollar is measured against six foreign cryptocurrencies including the euro and sterling. The index reached a high of 94.50 not seen since late September last year. However, it wore a bad outlook after there were reports of rising US job claims as opposed to predictions of a decline by US economists.
Labor data shows that the number of jobless claims climbed to 362k as of last week contrary to 351k in the previous week. Meanwhile, economists had predicted a decline to 330,000. Owing to this, the number of reapplications remained at 2.8 million for five consecutive weeks.
Also read:With the markets, there could be a possibility that the US Fed will stall its decision to stop the asset-buying program and postpone from November to another month, thereby keeping interest rates down and the dollar’s renewed momentum short-lived. The US Dollar index was exchanging hands at 94.263 as of press time.
Correction Looms on US Dollar
The charts also showed the prospects of the US Dollar witnessing a correction. Expert analyst TradingShot observed the dollar index forming a megaphone pattern, which is nearing a tipping point before the imminent correction takes place.
In contrast, the unimpressive jobless claims report could increase investors’ appetite for Bitcoin, experts predicted. Another industry expert suggested that the weakening dollar, devaluation coupled with surging inflation will make investors turn to the crypto market as a last resort.
He reasoned that Bitcoin is a hedge against inflation. As such, if the inflation in the US continues to rise, this could push the value of the benchmark cryptocurrency up. He added that the dollar’s value will continue to be lower than Bitcoin’s. As of press time, Bitcoin was ranging at the $47k zone after gaining 9% on
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