BTC/USD Forex Signal: US Inflation and Fed Minutes are Supportive

Bullish view

• Buy the BTC/USD pair and set a take-profit at 32,500.
• Add a stop-loss at 29,000.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 29,190 and add a stop-loss at 28,000.
• Add a stop-loss at 31,000.

The BTC/USD price remained above the important resistance point at $30,000 after the encouraging American inflation data. It was trading at $30,100 on Thursday morning, meaning that it has jumped by over 96% from the lowest point in 2022.

Fed minutes and US inflation

The main catalyst for Bitcoin and other cryptocurrency prices is monetary policy. Most investors believe that the Federal Reserve will join other centrral banks to pause hikes in the near term. Already, central banks in countries like Canada, Australia, and India have all paused their rate hikes. All of them have argued that the pause was necessary and that they will be ready to tighten more if inflation remains stubbornly high.

It seems like conditions in the US are conducive for a pause as well. Data published last week showed that wages continued dropping even as the unemployment rate remained at a multi-decade low. Additional data revealed that manufacturing and services PMIs dropped in March.

Meanwhile, on Wednesday, data from the Bureau of Labor Statistics showed that the country’s inflation continued dropping in March. The headline inflation dropped to 5.0% in March from a year earlier and to 0.2% on a monthly basis. This decline was bigger than what most analysts were expecting.

Therefore, there is a likelihood that the Fed will pause its rate hikes after the meeting in May. In fact, minutes published on Wednesday showed that some Fed members considered pausing interest rate hikes in a bid to watch the situation in the banking sector. The Fed also warned that the country will likely have a mild recession later this year. As such, it will be a bit difficult for the bank to hike rates in a period of recession. The minutes said:

“Several participants emphasized the need to retain flexibility and optionality in determining the appropriate stance of monetary policy given the highly uncertain economic outlook.”

BTC/USD technical analysis

The daily chart shows that the BTC/USD exchange rate continued rising in the overnight session as hopes that the Fed will change its posture rose. The pair remained above the key resistance at 30,000 and 29,190. It is supported by the 50-day and 200-day moving averages while the MACD is above the neutral point.

Therefore, in this case, the trend is your friend, meaning that the pair will likely continue rising in the near term. However, a pause cannot be ruled out as some traders start taking profits.