The US Dollar Index is on track for its best month since June, up nearly 2% in September, as a hawkish Federal Reserve and deadlocked US-Iran talks push money toward the greenback. The index touched 101.61 on Tuesday — its highest level since late July — and was trading near 101.4 on Wednesday, closing in on its strongest close since April 2025.
What's notable is what Bitcoin did while that happened. It's up 6.14% this month, even as the dollar climbed. September has historically averaged a 2.42% loss for BTC, so this year's script has flipped.
The Fed's hawkish turn
The Fed raised rates by a quarter point on September 16, and officials haven't been shy about signaling more. Fed Governor Michael Barr said additional increases will likely be needed to bring inflation back to target. New York Fed President John Williams said one more hike may be appropriate late this year.
That's putting upward pressure on yields across the curve. The 30-year Treasury yield recently hit its highest level since 2002 — a level that tends to draw capital into dollar-denominated assets and away from risk. Oil prices are staying elevated with US-Iran talks deadlocked, adding another layer to the inflation picture.
The next Fed policy meeting is October 28. Between now and then, two data points matter more than anything else.
Bitcoin's unusual September
On September 20, Bitcoin posted its first weekly close above its 50-week moving average since November 2025. Galaxy's Alex Thorn said such reclaims have historically pointed to bear market lows — a signal worth watching, though not a guarantee.
Binance Research noted that Bitcoin's September 8 golden cross came after 293 days below its 200-day average. That's a long stretch, and the move back above it is the kind of thing chart-watchers treat as a regime shift. Whether it holds through a dollar rally is the open question.
Historically, October has been Bitcoin's strongest month. It has finished higher in 10 of 13 years, with an average return of 19.92% and a median of 14.71% — the highest of any month. If that pattern repeats, September's gain is a launchpad. If the dollar keeps grinding higher, it's a headwind.
Two data points before the next Fed meeting
Traders are waiting on Wednesday's Personal Consumption Expenditures price index, the Fed's preferred inflation gauge. The monthly jobs report follows on Friday. Hot readings in either could revive October hike odds, which had recently slipped to roughly even.
The dollar's strength is the story of the month, but it's not the whole story. Bitcoin's ability to hold gains against a rising DXY is the part that doesn't fit the usual pattern — and it's the part traders will be watching when the PCE print lands.
For now, the dollar has momentum, the Fed has cover to stay hawkish, and Bitcoin has a rare September win. Friday's jobs number is the next thing that could change any of it.
