Tezos price action could see its weekly loss doubled on the back of US inflation data

• Tezos price action dropped 8% for the week and could see losses deepening.
• XTZ price could come even further under fire in case US inflation remains elevated.
• At risk is a 16% decline that could see XTZ's price nearing $1.19 to the downside..

Tezos (XTZ) price action tanks firmly this morning prior to the release of US inflation numbers this afternoon as markets presume  they will come out similar to the jobs’ data from last week. If that is the case, an upside surprise will trigger dollar strength amidst a wave of risk-off on inflation-induced recessionary fears. This, in turn, could see Tezos price action collapse and double its losses. To make matters worse, the low of 2022 is at stake, with the June lows under pressure.

XTZ price could see new lows for the year

Tezos price action takes a heavy beating this week with already an 8% negative performance. As if that is not enough, the US inflation numbers this afternoon could make the car crash complete, forcing XTZ price action even lower. Should the inflation numbers turn out to be an upside surprise and not show any sign of weakening again, expect traders to readjust their positions in light of more and longer hikes from the Fed, a firmer dollar and consequently weaker cryptos which are priced in dollars.

XTZ's price would drop below the monthly S1 support level in such a scenario and look for the next support that comes in at the June low at $1.19. Although the risk is high that that level will be breached from a sharp nosedive move, bulls would be expected to keep a hold of $1.15, and the monthly S2 to trigger a bounce. Do not expect that bounce to hold any good cards, however, as it will only be there to let the Relative Strength Index cool down after trading in oversold.

XTZ/USD Daily chart

Of course the opposite is also possible. As economic numbers are very binary, the markets would welcome a sharp decline in inflation. Such a decline would be indicated by US inflation dropping from 8.3% to 6% or lower, for example. Depending on the sharpness of the fall, expect to see a similar reaction in the dollar which would take a huge step back and might offer XTZ price some upside towards $1.40.