The US Dollar Index (DXY) fell again on Tuesday and is trading not far above its 2025 low.
After a strong gain in the weeks following Donald Trump’s election in November 2024, the dollar fell sharply during the first half of 2025 and has remained in a choppy pattern near multi-year lows for the past few months.
The dollar’s big drop in 2025 was initially largely accompanied by the expected broader market reaction, with things like stocks, gold and bitcoin. all rising sharply to new records.
However, the story since October is somewhat different: stocks and other hard assets have continued to rise; Indeed, gold, silver and copper rose sharply again on Tuesday to hit new all-time highs, but bitcoin and the broader crypto markets have endured brutal bearish moves.
What could be next for the dollar?
The DXY index is now trading just above an important long-term support level that dates back to the global financial crisis of 2008. This level has been tested and realized several times, most recently in July and September of this year.
As several foreign central banks, including the Bank of Japan, move toward tighter monetary policy, the U.S. Federal Reserve faces increasing pressure, most notably from President Trump, to lower interest rates. This divergence raises the possibility of the dollar falling below that important support.
While the dollar’s weakness this year has yet to have any healthy effect on bitcoin, perhaps a break of that long-term support could be the news that finally drives a reversal of the cryptocurrency’s bearish trend.
