The US dollar is starting to recover after years of support. Meanwhile, bitcoin (BTC) and gold fell.

In addition, the European Central Bank (ECB) is encouraging stronger rallies in the euro and dollar.

European Central Bank wants to weaken euro when dollar starts to rebound
Bitcoin and gold prices are reacting negatively to the rise in the dollar as markets value both assets in dollars. If the value of the dollar rises, the value of BTC decreases in relation to the dollar.

Since the dollar rose from its one-month opening on September 1, bitcoin has dropped from $ 12,086 to $ 11,160. A similar reaction was seen in gold, which has dropped by about 1.8% over the past two days.

In the short term, analysts usually expect the dollar to rise. This week, the European Central Bank said it would consider offsetting the euro’s gains by controlling exports and encouraging additional monetary stimulus.

Currency analysts say the European Central Bank may further “weaken” the strength of the euro. In the short term, this could push the dollar higher, which could lead to lower Bitcoin and gold sales. MUFG analyst Hardman told me:

“Overall, the comments suggest that an immediate political response from the ECB to a weaker euro seems unlikely and they will rely more on the jaw to weaken the strength of the euro.”

But currency strategists expected the euro to weaken against the dollar after the first rally. In a note to clients, Arkera’s global macro strategist Viraj Patel said the euro is approaching a pain threshold for decision-makers.

Patil suggested that if the euro continues to rise, a strong reaction from the European Central Bank is possible. Since then, the European Central Bank has warned several times about the strengthening of the euro.

The direction of the recovery in the dollar and the falling euro is still uncertain. There is a possibility that both the euro and the dollar may fall simultaneously.

At the moment, given the strength of the dollar’s recovery, bitcoin traders are cautiously declining.

What Bitcoin traders think will happen in the short term
Bitcoin could return to $ 11,600 if the $ 11,200 support level persists, according to Michael Van de Pope, a full-time trader on the Amsterdam Stock Exchange.

Since August 26, for over a week, the $ 11,200 level has been the main support area for bitcoin. Bob wrote:

“The first major pivot cannot break out, so we will test the lows again. If it persists -> new test and upside potential against $ 11,550-11,700. In case of a breakout, I’ll aim at $ 10,600. – 10800 “.

Trader XO, a pseudonym trader who trades cryptocurrencies and forex markets, said the dollar had regained its “massive” monthly level. If the dollar index rises to the next resistance of more than 94.5 points, it could lead to a decrease in Bitcoin’s momentum. The merchant said:

“On Tuesday, the daily bullish pin line was reached and the price broke the downtrend channel, the price also reached a huge monthly level and will continue to look for short positions in the euro against the US dollar and long pairs against the dollar for BTC – no comment.”

Source: CoinTelegraph