Dollar Index (DXY) Parabolic Rise Fails Due to Falling US Inflation
The decline in U.S. inflation is supporting the stock and cryptocurrency markets. The U.S. dollar reached its highest point of 114.80 and halted its parabolic surge.
The correlation between the U.S. dollar index and conventional equities and the cryptocurrency market is negative. If the DXY has actually achieved the macro top of this cycle, it is probable that Bitcoin has already recorded or is close to recording the macro bottom of the present bear market.
The most recent economic data from the United States indicates that in October 2022, inflation declined much more than anticipated. This is encouraging news for U.S. consumers and the Federal Reserve, which has been working for months to reduce the Consumer Price Index (CPI).
In October, the U.S. CPI came in at 7.7%. This is 0.2% less than the average estimate of 7.9% among experts. In addition, it is much less than the inflation rate of 8.2% in September 2022. On the long-term graph, the anticipated peak of inflation in the United States occurred in June 2022, when the CPI reached 9.1%. Since then, it has decreased, and it is probable that this tendency may continue.
The expectation that Fed officials would now raise interest rates less aggressively due to the apparent success of their plan is increased by the decline in inflation. In accordance with expert estimates, they hiked interest rates by 75 basis points at its latest meeting.
The U.S. base interest rate is at 4 percent, the highest level since 2008. Consequently, its future rises are anticipated to be less aggressive. In addition, this should provide respite for stock markets and other risky assets, such as cryptocurrency.
Following the announcement of October inflation figures for the United States, the U.S. dollar index saw a significant drop.