Crypto consolidates as the Dollar anticipates CPI data

The Dollar has been falling ever since the Fed started softening its stance on policy. The pivot from aggressive 75 basis point rate hikes resulted in a reversal in Dollar long positions.

We have seen all major FX pairs such as EURUSD, GBPUSD, and USDJPY reverse. Traders are now awaiting CPI data released today as an indication of the direction of the Dollar. High CPI data would be bullish for the Dollar and lower-than-expected CPI data would be bearish.

Bitcoin is trading sideways as the market has been quiet since the FTX collapse. December is considered the holiday season for most traders and we see less volume around this time of the year.

In the short term, if there are no surprises in the crypto market then we should see Bitcoin and Ether react mostly to the price of the Dollar. A weaker dollar would push crypto higher. We do expect the dollar to weaken as the Fed hikes rates one last time before the end of the year.

In today’s DIFX Analytics, we’re going to look into the following assets:

Bitcoin is trading sideways

Bitcoin is still consolidating at the $17,000 range. RSI is weakening as price action moves sideways.

Bitcoin may be accumulating long positions before attempting to break $17,500. We have price action hovering just above the 50-day and 100-day EMAs in the near term as a slight bullish indication, however, we have not seen anything concrete to signal an upside confirmation.

DXY anticipating CPI data in a triangle formation

The Dollar has been on the decline since early October and the high for the year was set at the end of September. Since November, we have seen a slide with lower lows set until early December.

As we approach the last rate hike of the year, we have seen an asymmetrical triangle formed in price action and RSI. CPI data will be released today which is expected to come out at 7.3%. Anything lower or higher will have relative effects on the Dollar and cause a breakout of this chart pattern.

Ether is trending down

Ether is rebounding off a resistance level close to $1300 as it begins to lose momentum. We may see a move downwards toward $1220.

RSI is also trending down and moving with price action, further signaling downside pressure.

Gold is losing steam but awaiting data

Gold is trending upwards within the $1720 – $1810 range. We have seen bullish sentiment in price action since early November.

RSI has begun to weaken on the 4-hourly chart and the price almost double-topped around the $1800 range, yet we are still following this trend.

CPI data will have a major effect on Gold as it is moving inverse to the Dollar. If the Dollar falls after the data release then we can expect Gold to rise and vice versa.

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DIFX shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee, or implication by DIFX that the forecast information will eventuate, that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades by the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses in particular if the conditions or assumptions used for the forecast or mentioned in the analysis do not eventuate as anticipated and the forecast is not realized.

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