The U.S. dollar index is experiencing stress due to the fact that Donald Trump’s tariffs are leading investors to seek out other currencies.
On Tuesday, the DXY index was transacted at $99.95, marking a 9.20% decrease from its peak this year. Moreover, it has been lingering near its lowest point since July 2023, and the appearance of a “death cross” suggests potential further declines in the forthcoming months.
The US dollar index could crash further
The technical indicators suggest that the U.S. dollar index may continue to depreciate, as it appears to have formed an inverted cup and shoulder pattern with a depth of approximately 9%. This pattern indicates that there could be additional downward movement, potentially taking the index down to around $91.
To add to that, a significant poll of financial institutions indicates that they are generally pessimistic about the currency due to the ongoing trade war. In fact, Bank of America’s Global Fund Manager Survey reveals that around 61% of respondents anticipate the dollar to decrease in value over the next year. This is the most negative outlook these fund managers have expressed since 2006.
These investors express apprehension over Trump’s policies and their potential effects on the economy. Their primary worry revolves around tariffs, as experts predict these could negatively impact the overall economic health. Numerous portfolio managers anticipate that the U.S. might experience a recession in 2023.
Despite Trump scaling back certain tariffs, those imposed on China remain high and unsettling. A large number of Chinese products entering the U.S. will be subjected to a 145% tariff, affecting merchandise valued at hundreds of billions of dollars. On Tuesday, China announced it would halt purchases of Boeing planes by its airlines.
Additionally, the U.S. Dollar Index has fallen while Congress deliberates over President Trump’s budget plan, which encompasses a massive $4.5 trillion in tax reductions.
A falling US dollar could benefit Bitcoin and most altcoins
A declining US Dollar Index might advantageously impact Bitcoin (BTC) and other digital currencies for three key reasons. Primarily, many of these coins are traded using Tether, a stablecoin that is tied to the U.S. dollar. Consequently, when the U.S. dollar weakens, Bitcoin and its alternative counterparts become more affordable due to this relationship.
In second place, it’s believed that the persistent devaluation of the dollar stems from worries about the health of the U.S. economy and the effects of tariffs. This could potentially prompt the Federal Reserve to reduce interest rates. Notably, some Federal Reserve officials like Christopher Waller and Susan Collins have hinted that the bank stands prepared to take action should a recession occur.
Thirdly, if the U.S. dollar index weakens, Bitcoin and other digital currencies might gain value because they are frequently viewed as safe investments. Despite experiencing a decline in its own price this year, Bitcoin has outperformed the stock market.
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2025-04-15 20:10