Bitcoin seems to have a great time in the market with the surge of the $50,000 mark and stays strong. Meanwhile, the US dollar has seen a good bounce and suggests that it will stay strong in 2022.
US Dollar Index (DXY) measures how strong the dollar is against the foreign currencies and is trending in the market towards the ‘symmetrical triangle.’ In this scenario, the index keeps treating and monitoring the structure’s falling trend and has the support which is the breakout will help in resolving upside. In case there is a breakout of the symmetrical triangle, there is a technical profit targeting bulls with the maximum distance, which is between trending lines of the upper and lower structure. This pushes DXY on the way towards 97.80 in the coming session.
Euro turning weak behind Dollar
The positive view of the dollar appears with the prospect of the Federal Reserve’s taper plans. In the month of December, the central bank of the US has signaled its chance of tightening the monetary policies. Moreover, it will follow with the three times of rate hike during 2022.
The recent surge of the dollar stemmed in part from the eurozone’s ongoing cash surplus. According to finance company FactSet, a surge of stimulus measures launched under the guidance of the European Central Bank (ECB) due to the aftermath of the pandemic left all eurozone banks with extra liquidity.
These euro banks are exchanging their excess Euros against the rising dollars using the Federal Reserve’s reverse repurchase mechanism, which pays 0.05 percent interest allowing investors to save money and is a better option compared to the government debt under short-term that comes with it.
On 20th December, around $1.7 trillion was received under the Fed’s mechanism of buyback and was considered as the huge cash inflow in just one day.
In the long term, there is a huge chance of Bitcoin staying at a positive rate throughout the next year. Rekt Capital, a market analysis firm, says that the crypto will have a great time around June-July, and Bitcoin will touch $69,000.