The U.S. dollar index (DXY) is experiencing another drop on Tuesday, hovering just above its 2025 low.
Following a strong rally in the weeks after Donald Trump’s November 2024 election win, the greenback plummeted sharply during the first half of 2025, maintaining a volatile pattern near multi-year lows over the past few months.
This significant decline in the dollar in 2025 was accompanied by expected reactions in the broader market, with assets such as stocks, gold, and bitcoin all experiencing significant rises to new highs.
However, since October, the narrative has shifted somewhat—while stocks and other tangible assets have continued to soar (with gold, silver, and copper all hitting record highs again on Tuesday), bitcoin and the wider crypto markets have faced severe downturns.
What could be next for the dollar
The DXY index is currently trading just above a crucial long-term support level established during the 2008 global financial crisis. This level has been retested and held multiple times, most recently in July and September of this year.
With several foreign central banks, including the Bank of Japan, moving towards tighter monetary policies, the U.S. Federal Reserve is under increased pressure, particularly from President Trump, to decrease interest rates. This divergence raises the potential for the dollar to drop below that key support level.
Although the weak dollar this year hasn’t yet positively impacted bitcoin, a breach of this long-term support might provide the catalyst needed to reverse crypto’s downtrend.
