The U.S. Dollar Index (DXY) has recently broken below the 97.0 level, hitting a new yearly low and extending its downward trajectory. This development has significant implications for major assets like Bitcoin and gold, both of which are sensitive to shifts in macroeconomic sentiment and currency movements.
As the Dollar Index fell further to 94.45 during the session, gold reclaimed the $3,300 mark and climbed to a session high of $3,344. Meanwhile, Bitcoin struggled to hold above $108,000 and tested support near $106,500. These movements underscore the heightened market uncertainty ahead of key events, including the July 9 tariff suspension deadline, proposed U.S. regulatory bills for stablecoins, and ongoing trade negotiations.
Investors are advised to closely monitor the upcoming Non-Farm Payrolls data release on Thursday, July 3, for further directional cues.
U.S. Dollar Index Enters Critical Phase Amid Sustained Downtrend
The daily chart indicates that the U.S. Dollar Index has broken below the 97.3 support level, extending its year-to-date decline to approximately 12.5%. Momentum indicators, including the AO indicator, suggest an increased probability of a medium to long-term bearish trend. In the long run, this could open the door for a test of support near 93.0 or even 89.0.
However, in the near term, the index has entered a critical time window around July 1. With technical indicators showing oversold conditions, a short-term consolidation or minor rebound is plausible. Key levels to watch include support at 95.9 and resistance at 97.3.
Traders should remain cautious as the dollar may experience a pause in its decline before resuming its broader downward trajectory.
Gold Holds Near Highs with $3,360 as Decisive Level
Gold continues to trade within a broad consolidation range between $3,150 and $3,500. The $3,360 level remains a critical gauge of bullish and bearish momentum. A sustained break above this resistance could signal a move toward the all-time high near $3,500.
On the downside, immediate support is found near $3,326. A break below this level might lead to a retest of the $3,300 threshold or lower.
Although the overall trend remains constructive, the current adjustment period in terms of time and price action suggests that bullish investors should exercise patience and avoid overexposure.
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Bitcoin Tests Key Support Amid Short-Term Uncertainty
Bitcoin faced resistance near the $108,500 level and has since pulled back toward the $106,000 support zone. While the broader uptrend from April 7 remains intact, the short-term price action suggests uncertainty.
A break below $106,000 could accelerate selling pressure, potentially pushing Bitcoin toward the next major support near $103,500. Conversely, a rebound above $108,500 may signal strength and a retest of the all-time high around $112,000.
Traders should note that the current correction phase may require more time to resolve. A clear breakout above $112,000 would be necessary to reaffirm the bullish structure.
Frequently Asked Questions
What is driving the U.S. Dollar Index lower?
The decline is largely attributed to macroeconomic uncertainties, including expectations of prolonged low interest rates, fiscal stimulus measures, and evolving trade policies. These factors reduce the dollar’s attractiveness as a safe-haven asset.
How does a weaker dollar affect gold and Bitcoin?
A falling dollar typically supports dollar-denominated assets like gold and Bitcoin. Gold benefits from its status as an inflation hedge, while Bitcoin is increasingly viewed as a digital store of value amid currency devaluation concerns.
What should traders watch in the coming days?
Key indicators include the U.S. Non-Farm Payrolls report, developments in crypto regulatory bills, and broader financial market sentiment. These can influence short-term volatility in currency and crypto markets.
Is now a good time to buy gold or Bitcoin?
While both assets show long-term potential, short-term volatility remains high. Investors should consider their risk tolerance, use technical levels for entry timing, and avoid over-leveraged positions.
What are the major support levels for Bitcoin?
Critical support levels include $106,000 and $103,500. A hold above these levels may indicate consolidation, while a break below could lead to deeper corrections.
Can gold reach new all-time highs soon?
A break above $3,360 could open a path toward $3,500. However, this requires sustained buying momentum and supportive macroeconomic conditions.
Note: This analysis is based on current market conditions and is subject to change. Always conduct your own research and consider seeking advice from financial experts before making investment decisions.