DIFX Analytics: a weak Dollar is pushing Gold higher, Bitcoin is consolidating

Last week Friday, the Unemployment Rate came out more than expected which is considered weak data. This translates to a positive result from the Fed as it signals rate hikes have helped tighten the economy.

Investors can take this as an indication that interest rate hikes may slow down, meaning less money will pour into the Dollar. This is why we saw a selloff in USD on Friday. The Dollar’s bearish slide meant more cash moved into other assets such as Gold, Crypto, Stocks, and Major FX pairs.

We should note that traders are holding onto any data that may indicate a pivot in policy from the Fed and we should take this reaction with a pinch of salt.

Unemployment rate data came out weak, however, Non-farm Payrolls data, which is a short-term indicator of market growth, came out stronger than expected. This is a signal that the unemployment rate could fall in the long term, which is not good for the Fed and may cause them to result in aggressive hikes again. 

It’s very interesting that the market overlooked this data but this is due to the fact that the pivot narrative is more profitable, and thus attractive. Any data that could signal a change in direction from the Fed will cause selloffs in the Dollar and traders do not want to miss it.

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

Dollar is experiencing a bearish trend

A bearish trend has started to form on the 4-hour chart for the Dollar Index, as the bullish trend is broken for the asset.

This may be a flag pattern formation or just a consolidation trend before more bull runs. In the short term, we can expect the asset to trade between these key levels.

The Fed Meeting and Jobs Data both couldn’t initiate a break out of these key levels which indicates the strength of the range. Technically, we can expect a bullish retracement followed by a continued bearish slide until the support level at $109.5 is hit.

After weekend gains, Bitcoin is consolidating

Bitcoin broke through the resistance level at $21,000 as the dollar sell-off began after the jobs data release. We saw bullish gains throughout the crypto market on Friday.

Over the weekend, the market experienced profit-taking and a slight consolidation. As the FX markets opened on Monday morning, the Dollar opened higher, causing Bitcoin to fall.

We may see Bitcoin consolidate around this range during the dollar retracement and if the Dollar slides more then we can see Bitcoin make a move for $22,000.

Gold is enjoying a weak dollar

Gold has seen a significant increase since the jobs data release on Friday. The unemployment rate came out weaker than expected and is seen as bearish for the Dollar.

The data caused a sell-off in USD which translates into a bull run for Gold. The asset touched and rebounded off the resistance level at $1680.

The metal is currently trading at $1672 at the time of writing. We can expect some downside action from the metal as the Dollar experiences retracement. If the Dollar continues its downward trend, we can expect Gold to break out of this trend and make a move for $1700.

Ether may see a bullish momentum

Ether is trending upwards in the range shown on the chart. We can expect bullish momentum in the asset if the Dollar selloff persists.

During the weekend, we saw a bearish slide as traders took profits from Friday’s bullish gains. In the short term, we can expect the asset to trade between these key levels of  $1490 and $1711.

Depending on the sentiment in the US, we may see a move for either support or resistance. We can expect long positions to enter the market around $1550 if price action follows the trend.



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Trading Disclaimer

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 in accordance with 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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