- Ripple price is in a classic bounce-off this Tuesday after the sharp nosedive move on Monday.
- XRP price is set to rally back and erase most of the incurred losses since last week.
- Expect a 40% rally as dollar strength backs off and the earning season is nears its end.
Ripple (XRP) price has sharply declined since last week as markets got shaken by disappointing and mixed earnings, as well as more geopolitical tensions. With that pressure, XRP price tanked from $0.65 to $0.48 and saw the Relative Strength Index (RSI) shoot deeply into oversold territory. A sharp rebound is materialising this morning as the dollar backs off, and several central banks are doing market interventions to support their local currencies against the dollar, which opens a window of opportunity for XRP price to reclaim a few levels and travel back to $0.65 by the end of this week.
XRP price sees central bank chain reactions creating an unforeseen tailwind
Ripple price and cryptocurrencies have never been that correlated to the dollar strength until now. It is no secret that the persistent dollar strength that has been dominating markets in every segment and corner has also put its mark on cryptocurrencies. With that in mind, the countercyclical moves that got into play this morning are even more critical to understand as several big central banks, amongst which the Chinese central bank and the Indian central bank, are selling dollars to support their currency from further devaluation. This is weakening the dollar as floods of bucks are hitting the markets.
RP price uses this moment to pair back some incurred losses and this window of opportunity to rally higher, at least for today. Expect to see a run-up today towards $0.5852. If XRP price can close above there, look for the test of support and rebound higher to the monthly pivot above $0.65. With this move, XRP price gained around 40% profit and added $0.17 to its price value.
XRP/USD daily chart
Risk to the downside comes with markets pushing against central banks and testing their ability. That would mean, at one point, a central bank is no longer in the position to match the offer for the local currency with dollars and needs to stop its operation. This would trigger an oversupply of local currency and, in the equation, strengthens the dollar even more. For XRP price, that would mean a drop below $0.4799 and either a test of $0.4228 or $0.3710 to the downside, printing new lows since late 2021.