the US dollar recovers from multi-year support

The United States dollar started to recover from a multi-year support level. Simultaneously, fell the prices of both Bitcoin (BTC) like gold.

In addition, the warning from Central European Bank (ECB) against the appreciation of the euro is further catalyzing the recovery of the dollar.

The ECB seeks to weaken the euro as the dollar just begins its recovery

The prices of Bitcoin and gold respond negatively to the rise in the dollar because the markets value both assets against the dollar. If the dollar value goes up, the value of BTC relative to the dollar goes down.

Since the dollar has risen since its monthly open on September 1, Bitcoin price decreased from $ 12,086 to a $ 11,160 minimum. Gold has experienced a similar response, falling almost 1.8% in the last two days.

Daily chart of the US dollar index with key levels. Source: Trader XO

Short term, analysts generally anticipate dollar momentum to strengthen. This week, the ECB said it would seek to offset the rise in the euro by controlling exports and encouraging more monetary stimulus.

Currency analysts believe that the ECB could continue to “cushion” the strength of the euro. Short term, that could make the dollar rally, which could put selling pressure on Bitcoin and gold. MUFG analyst, Lee Hardman, said:

“Overall, the comments suggest that an immediate policy response from the ECB to help weaken the euro seems unlikely, and for now they will rely more on jawbonings to curb the strength of the euro.”

But currency strategists predicted the euro would sink against the dollar after an initial rally.. On a note to clients, the global macro-strategist of Archery, Viraj Patel, said that the euro is approaching the “pain threshold” of policy makers.

If the euro recovers further, Patel suggested that a strong reaction from the ECB is likely.. Since then, the ECB has warned against a rise in the euro on multiple occasions.

It remains uncertain whether the trend of the recovery of the dollar and the weakening of the euro will continue. There is a possibility that both the euro and the dollar will fall simultaneously.

For now, considering the strength of the dollar rally, Bitcoin traders are cautiously turning bearish.

What BTC traders believe will happen in the short term

According Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, Bitcoin could fall back to $ 11,600 if the $ 11,200 support levels hold.

Possible short-term Bitcoin price scenario. Source: Michael van de Poppe

Since August 26, for more than a week, the $ 11,200 level has served as a key support area for Bitcoin. About this, Poppe wrote:

“The first major pivot was unable to provide a breakthrough, so we will retest the lows. If these hold -> another test and a possible rally towards $ 11,550-11,700. If a breakdown occurs, I would be aiming for $ 10,600-10,800. “

The trader XO, trading cryptocurrencies and currency markets, said the dollar recovered a “huge” monthly level. If the dollar index recovers to the next resistance at more than 94.5 points, could cause BTC momentum to slow down. XO twitteó:

“The daily bullish pin bar was printed on Tuesday and the price has broken through the downtrend channel. The price also recovered a huge monthly level. It will continue to look for short and long pairs of euro dollars. As for BTC, no comments”.

Keep reading:

–