US Dollar Surge Tests Bitcoin as Fed Rate Bets Rise

The U.S. dollar has climbed to its strongest level in nearly 18 months, creating fresh pressure for risk assets as investors prepare for potentially higher interest rates and persistent global economic uncertainty.

The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, rose to around 102.5 on Monday. That marks a significant advance from roughly 99 in early September and puts the index comfortably above its 200-day moving average near 99, reinforcing bullish momentum for the dollar.

Dollar strength can weigh on stocks, cryptocurrencies and other risk assets. A stronger greenback increases the burden of dollar-denominated debt outside the United States while reducing purchasing power for international investors. Higher U.S. interest rates can amplify that effect by making cash and government bonds more attractive compared with assets such as bitcoin.

The Federal Reserve has played a major role in the dollar rally. Its September decision to raise interest rates by 25 basis points brought the target range to 3.75%–4%. Markets are now anticipating additional tightening, with a 4.5%–4.75% range seen as the most likely outcome by June 2027.

Expectations for higher rates have also pushed Treasury yields upward amid persistent concerns about inflation, government borrowing and U.S. fiscal sustainability. Long-term yields have climbed to levels not seen in more than two decades.

Weakness in the euro is providing another boost to the DXY because the currency represents 57.6% of the index. The euro has fallen toward $1.12, its lowest level in 17 months, as fiscal and political uncertainty weighs on sentiment. France is facing concerns over its deficit and borrowing costs ahead of next year’s presidential election, while Spanish Prime Minister Pedro Sánchez has called a snap election for Nov. 29.

Despite the stronger U.S. dollar and rising bond yields, bitcoin has remained resilient, holding around $86,000 following a strong start to October.