- Bitcoin Cash price jumped sharply after the US inflation data.
- The US dollar index (DXY) has crashed to the lowest level since April last year.
- The CBOE VIX index has moved below $15.
Bitcoin Cash price made a strong bullish breakout after the latest US consumer price index (CPI) data. BCH coin jumped to a high of $295, which was higher than this week’s low of $250. The US dollar index (DXY) plunged to a low of $100.66, the lowest level since April last year.
DXY and VIX indices plunged
The DXY index is about to move below the support level at $100, meaning it has fallen by over 12.4% from its highest level in December. At the same time, the VIX index plunged to $13.80, which was much lower than the year-to-date high of $30.84.
The VIX and DXY indices have been in a strong bearish downward trend as investors reacted to the latest US inflation data. As I wrote in this article, the headline and core consumer inflation dropped in June. Inflation dropped to 3.0% while core inflation fell to 4.8%.
The headline consumer inflation dropped from 4.1% in May to 3.0% in June. This is a sign that inflation is on track to hit the Fed target of 2.0% in the coming months. For one, ocean shipping costs have dropped sharply internationally.
At the same time, data published by Chinese authorities showed that the country is on the verge of moving to a deflation. This is notable since China is the biggest exporter to the United States. As such, there is a likelihood that consumer prices will continue falling in the coming months.
Therefore, Bitcoin Cash price rose as investors reacted to the latest inflation data. Historically, cryptocurrencies tend to move inversely to the US dollar. For one, a weaker dollar is a sign that the Fed will likely pause its interest rate hikes.
Bitcoin Cash price forecast
The daily chart shows that the BCH price has been in a strong bullish trend in the past few days. It has moved above all moving averages. The coin seems to be forming a double-top pattern whose upper side is at $327.
Bitcoin Cash’s MACD has moved above the neutral point while the Relative Strength Index (RSI) has moved to the overbought level. Therefore, there is a likelihood that the coin will continue rising as buyers target the upper side of the double-top at $327, which is about 15% above the current level.
