- Dogecoin price declined slightly on Friday.
- The US dollar index (DXY) drifted upwards modestly.
- Tesla stock price imploded after price cuts.
Dogecoin price pulled back on Thursday after a series of weak Wall Street banks earnings. DOGE dropped to a low of $0.078, which was slightly below this year’s high of $0.081. This price is about 19.87% above the lowest level in December. DOGE/GBP also pulled back to 0.65 while DOGE/EUR fell to 0.072. The DXY index drifted upwards amid high recession hopes while Tesla stock price plunged.
DXY index crawls back
2023 has been characterized by a major crash of the US dollar. The US dollar index, which tracks the performance of the US dollar against a basket of currencies, crashed to $102. This price was much lower than last year’s high of $115.
The US dollar index plunged as signs of a Fed pivot increased. Data published last Friday showed that wage growth slowed dramatically in December. While that was a bad thing, investors interpreted it as a victory for the Fed. The Federal Reserve has been hoping that wages will stop growing, which it believes will help slow inflation.
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Additional data published on Thursday showed that US inflation was continued to decelerate. Headline CPI dropped from 7.1% in November to 6.5% in December. Therefore, some analysts have started predicting a deflation in the United States. As such, they believe that the Fed will continue its pivot this year.
More data published on Friday showed that a Fed pivot is imminent as banks warned of a recession. Wells Fargo increased its bad debt provisions dramatically while JP Morgan warned of a slow recession. Other banks like Bank of America and Goldman Sachs hinted that a recession was indeed happening.
These numbers led the US dollar index and the VIX to rebound modestly. This happened as the volatility rose while stock futures fell. Still, I believe that signs of a Fed pivot will push the US dollar index lower and Dogecoin higher.
Tesla stock price is imploding.
Another catalyst for the Dogecoin price is that Tesla is imploding. Tesla stock crashed by more than 6% in the pre-market after the company announced another round of price cuts in the US. It has already slashed prices in China and Europe.
This is a sign that demand for vehicles is falling amid high interest rates. Tesla stock price has plunged by more than 65% in the past 12 months and analysts expect the sell-off to intensify. Tesla matters to Dogecoin because Elon Musk made the coin popular in 2021. He is also one of its top investors. Therefore, a crash in Tesla shares could see him sell some of his coins.
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