In the global FX market this week, the US Dollar Index (DXY) rose by about 1.1% on a weekly cumulative basis. Not only did it mark the largest one-week gain in nearly three months, but on Friday it also technically broke above the key 200-day moving average. Although the Bank of Japan’s intervention after an FX review triggered short-covering in yen and slightly narrowed the dollar’s gains, support from the Fed’s persistently hawkish tone and the resilience of the underlying US economic fundamentals has led Wall Street institutions—including JPMorgan and Standard Chartered—to generally believe that the dollar’s near-term upside momentum remains strong.
From a technical perspective, a break above the 200-day moving average is often seen by traditional traders as a signal that a bullish trend has been established. Previously, when DXY broke through this level in March and June, it was accompanied by a wave of trend-following upside rallies. However, when viewed through the lens of Price Action and momentum indicators, after DXY broke above a key resistance level, it was quickly met with resistance as expectations of BOJ intervention surfaced. Selling pressure on the upside gradually became apparent—this looks more like a liquidity-sweep style probe higher rather than an irreversible one-way move.
In terms of traditional macro assets, although oil saw a structural premium split amid geopolitical supply-chain disruptions in the Middle East, the strength in US Treasuries and the US dollar did not trigger broader liquidity panic. Instead, the previously parked risk-off funds in the gold and FX markets are being gradually absorbed. As marginal expectations of geopolitical risk ease, macro-level negative pricing is approaching its end, making it difficult for the DXY—hovering in a high-range consolidation—to keep weighing on overall risk assets.
For the crypto market, this may actually create a potential right-side opportunity to go long.
$BTC showed excellent downside resilience during the period of dollar strength, with ample turnover of positions in key support zones. Once the DXY forms a false breakout near the 200-day moving average and then begins a technical pullback, the excess liquidity will accelerate back into the crypto ecosystem, paving the way for another momentum-driven breakout cycle for risk assets.📈
#DXY #Fed #Bitcoin