The US Dollar Index held near 102.2 early Monday, staying close to the 18-month peak it touched last week. The greenback has climbed almost 2% in September, from roughly 98.8 at the start of the month to above 102, and has now cleared its July highs near 101.6. That move matters for crypto because bitcoin has historically traded inversely to the dollar, and a firmer greenback tends to weigh on risk assets.
Where the rally could stall
The DXY has run into a trendline it broke last year, and two analysts see that as a spot where the advance might stop. Gert van Lagen, a macro strategist, expects the index to stall at that trendline and calls the move a bearish retest with macro implications. Sweep, co-founder of GlydeGG, used the same phrase — bearish retest — and expects a rejection. If that happens, he argues it would be bullish for crypto and stocks.
Not everyone agrees. Another analyst says the dollar remains in an 18-year bull market that started at a record low of 70.698 on March 17, 2008, and sees the rally running for years as the index approaches a quarterly golden cross. Trader Alejandro is also in the stronger-dollar camp, noting that a firmer greenback tightens financial conditions and tends to pressure risk assets, crypto and altcoins in particular.
The data that decides it
Wednesday's consumer price index report is the next major input, followed by producer prices and retail sales on Thursday. All of that lands ahead of the Federal Reserve's October 28 rate decision. The Fed raised rates to a range of 3.75% to 4.00% on September 16, its first hike since July 2023.
Rate expectations have shifted hard. As of press time, CME FedWatch put the odds of a hold this month at 82.8%, up from 51% a month earlier, when a hike carried 42.5% odds. The mood on the consumer side is sour: the University of Michigan's consumer sentiment index fell to 46.3 in its preliminary October reading, a five-month low, down from 48.1 in September, as conflict-driven living costs weighed on households.
Barclays sees room for a pullback
Barclays analysts think the dollar's rally has scope to stall, with some near-term retreat possible. They point to bond market volatility that has tightened borrowing conditions worldwide, and say that strain could push the Fed toward more soothing messaging before October 28 — especially if CPI comes in cool.
For crypto, the setup is unusually two-sided. Bitcoin gained 6.14% in September even as the dollar index rose nearly 2%, breaking its usual inverse relationship with the greenback. In October so far, total crypto market value has fallen 1.4%, a move tied to higher yields, an oil spike, and fund selling. If the dollar rejects at that trendline, one source of pressure on bitcoin would ease. A breakout would test whether September's resilience can repeat with the dollar at even higher levels.
The CPI print on Wednesday is the first real checkpoint. The Fed's October 28 decision is the second.
