Investors are bracing for a volatile week as key Federal Reserve speeches and the U.S. core PCE inflation report loom, influencing both crypto and traditional markets.
Dollar Index (DXY) Signals Potential Upswing
Following the Fed’s first interest rate cut since December, the U.S. dollar index (DXY) ended last week forming a dragonfly doji on the weekly chart—a classic bullish reversal pattern. Despite the dovish rate decision, the DXY briefly dipped below July’s 96.37 low before rebounding to 97.65, supported by resilient Treasury yields.
A dragonfly doji forms when open, high, and close prices are nearly identical, with a long lower shadow reflecting rapid buying after a sharp decline. This pattern, appearing after a downtrend and at critical support, suggests an impending dollar rally. Historically, stronger dollar trends tend to pressure risk assets, including cryptocurrencies, creating a cautious backdrop for the week ahead.
Bitcoin Encounters Resistance
Bitcoin (BTC) mirrored market indecision last week, forming a Doji candle at the key resistance defined by trendlines from the 2017 and 2021 bull markets. This indicates hesitation among bulls and potential selling pressure at a critical long-term level.
Daily charts show BTC flirting with a drop below the Ichimoku cloud, having breached the Sept. 1 trendline. Support levels include the 50-day simple moving average near $114,473 and Sept. 1 lows at $107,300. Surpassing last week’s high of $118,000 is crucial for bulls to regain control.
Ether Under Pressure
Ether (ETH) trades below the lower boundary of a contracting triangle on the daily chart, signaling renewed selling dominance. Key supports lie at the Aug. 20 low of $4,062 and the psychological $4,000 mark. Bulls need to reclaim the 24-hour high of $4,458 to restore upward momentum.
XRP MACD Turns Bearish
XRP presents challenges for bulls. Despite the debut of a U.S. XRP ETF, the weekly MACD has flipped bearish, signaling renewed downside pressure. Price action points to a retreat toward the upper boundary of a descending triangle on the daily chart. Last week’s tentative breakout failed to sustain a rally, leaving traders cautious.
Focus on Fed Speeches and PCE Data
Market attention turns to speeches from Fed Chair Jerome Powell and other officials for clues on interest rate policy. While last week’s rate cut suggested easing ahead, Powell emphasized a data-dependent approach.
Fed dissenting voice Stephen Miran, who supported a larger 50-basis-point cut, will also speak, adding uncertainty to market expectations.
The week concludes with the release of the U.S. core PCE index, the Fed’s preferred inflation gauge. Analysts expect a 2.7% year-on-year increase, with core PCE rising 2.9% in August—a modest uptick from July. These readings could shape expectations for future Fed policy.
