The crypto market faced headwinds on Tuesday as a combination of robust US labor data and upward revisions to Eurozone PMI figures reinforced the US dollar’s strength, keeping the EUR/USD pair range-bound and increasing pressure on risk assets like Bitcoin. According to analysts at Danske Bank, the greenback’s resilience is directly tied to a still-hot US labor market, while the slight improvement in European economic data failed to shift the broader narrative.
Fresh figures from the US Department of Labor showed job openings remained elevated in February, and initial jobless claims came in below consensus expectations. This labor market tightness gives the Federal Reserve room to maintain its restrictive monetary policy for longer, supporting the dollar and capping any potential rally in EUR/USD. Danske Bank strategists noted that as long as wage pressures persist, the Fed will be in no rush to cut rates.
Simultaneously, the Eurozone composite Purchasing Managers’ Index (PMI) was revised higher to 50.3 from a preliminary 49.9, moving just above the 50.0 expansion threshold. Germany’s composite PMI was also revised up to 50.9. While the revisions offer a modestly better outlook for Europe’s economy, they were not enough to tip the scales in favor of the euro. The services sector continues to drive activity, but manufacturing remains in contraction, leaving the overall recovery fragile.
EUR/USD has been oscillating in a tight range of 1.0800 to 1.0950, with the 1.0950 resistance proving difficult to break. Danske Bank warned that a drop below 1.0800 could trigger a retest of the March lows near 1.0700, which would likely coincide with a further dollar surge. For crypto traders, a stronger dollar historically acts as a headwind for Bitcoin and altcoins, as the inverse correlation between the DXY index and digital assets tends to reassert during times of macro uncertainty.
The upcoming US consumer price index report is seen as the next major catalyst; a stickier-than-expected inflation print could propel the dollar even higher, potentially pushing Bitcoin below critical support levels near $60,000. With the ECB also signaling a data-dependent approach, any softening in Eurozone growth could exacerbate the divergence between the Fed and ECB, adding to dollar bullishness and prolonging the pressure on cryptocurrencies.
