The Federal Reserve is set to hold its Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday, where key inflation data will be released. While interest rates are expected to remain unchanged, market uncertainty surrounding the Fed’s future actions is causing risk assets like Bitcoin to experience volatility.
Confusing Employment Data Adds to Uncertainty
Recent jobs data has added to the economic confusion in the U.S. The Bureau of Labor Statistics reported the creation of 270,000 non-farm payroll jobs in May, yet the Household Survey indicated a loss of 408,000 jobs. This conflicting data has muddied the economic outlook.
Moreover, there is a tendency for initial positive job figures to be revised downward in subsequent weeks, leading to suspicions of manipulation to make the economic situation appear better than it is.
FOMC Meeting: Rates Expected to Hold Steady
As the FOMC meeting approaches, the market is almost certain that the Federal Reserve will keep interest rates unchanged. This expectation follows recent rate cuts by the Canadian and European central banks, which reduced rates by 25 basis points.
For risk assets like Bitcoin, the likelihood of prolonged higher interest rates is not favorable. Sustained high rates could limit the liquidity needed to fuel the next phase of the bull market. However, a rate cut may be inevitable later in the year due to the mounting debt burden and the potential need for increased currency printing to manage the debt.
Bitcoin Faces Rejection: Key Support Levels to Watch
Currently, Bitcoin is reacting to market uncertainty by pulling back from the top of its bull flag. The cryptocurrency is testing a support zone around $67,000, and there is potential for a bounce from this level.
Critical Weekly Close for Bitcoin
On the weekly chart, the $67,000 support level appears robust. If this support fails, Bitcoin might find support at $63,000 or the upward trend line around $64,000. However, the weekly stochastic RSI suggests a potential bearish crossover. The upcoming weekly close will be crucial in determining if this bearish signal is confirmed.
