US dollar hits new highs as Bitcoin sinks to $60k
As the US dollar reaches a 6-month peak, fueled by strong employment data, Bitcoin takes a hit, falling to $60k. Upcoming Fed decisions and labor market data could further define the trajectory for both USD and Bitcoin.
Key points
- DXY, a US dollar index, hit a 6-month high
- Bitcoin fell below $60,000 intraday
- The 12-month correlation between Bitcoin and US dollar is near zero
- Upcoming events this week include the May FOMC meeting and US jobs date
US dollar index hits 6-month high
DXY, a major US dollar index, soared to a new year-to-date peak Tuesday, bolstered by an array of strong US currency movements and encouraging employment data. The Employment Cost Index (ECI) surged with a 1.2% growth in Q1 2024, hinting at strong employment data to come. This US dollar appreciation ahead of the impending Fed meeting and further employment reports shows traders are anticipating signals that interest rates will remain high throughout 2024.
Bitcoin hits $60k in a disappointing end to April
After reaching all-time highs in March, Bitcoin has turned around, concluding April at around $60,000—a 13% drop from the beginning of the month. However, BTC prices are still up considerably year-to-date and volatility remains high, meaning a wide range of prices are possible for May and beyond.
Bitcoin prices increasingly uncorrelated to US dollar
As both Bitcoin and the US dollar have appreciated through 2024, their 12-month rolling correlation nears zero, challenging previous notions of their historically inverse relationship. Today’s dramatic market activity, however, prompts speculation whether the traditional negative correlation could be strengthening once again.
Big week for US dollar with Fed meeting, jobs data to come
US markets brace for a pivotal week with the Federal Reserve's meeting on interest rate policies tomorrow, where expectations have evolved from the March projection of 2-3 cuts to potentially none. This meeting, along with the release of significant labor market data such as Nonfarm Payrolls on Friday, is awaited eagerly, following strong employment figures in 2024 that may influence the course of the US dollar.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
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