Bitcoin News Today: Dollar Climbs on Trade Hopes, Crypto Braces as Fed's Move Looms

The U.S. dollar climbed to multi-year highs on Monday, buoyed by mounting optimism over trade dynamics and a near-certainty of a Federal Reserve rate cut ahead of its pivotal policy meeting. The EUR/JPY cross, a key gauge of dollar strength, reached an all-time high of 178.15 before retreating slightly to 177.80, reflecting sustained bullish momentum amid technical indicators that suggest further gains could follow, according to an FXStreet forecast. Meanwhile, cryptocurrency markets braced for volatility as investors parsed signals from central bank policy and macroeconomic data, with Bitcoin attracting $931 million in inflows last week amid expectations of monetary easing, according to a TradingView note.

The dollar's ascent is being driven by a confluence of factors, including a narrowing U.S.-China trade deficit and a surge in demand for safe-haven assets. The EUR/JPY cross remains within an ascending channel, supported by its nine-day exponential moving average (EMA) of 176.78 and a 14-day relative strength index (RSI) near 70, which analysts interpret as a sign of robust short-term momentum, per the FXStreet forecast. A break above 178.15 could propel the pair toward 182.90, while a pullback below the EMA would test the 50-day EMA at 174.35, potentially signaling a shift in medium-term sentiment.

The Federal Reserve's upcoming decision, expected today, has become a focal point for global markets. Derivatives data show a 98.3% probability of a 25-basis-point rate cut, which traders view as a continuation of the central bank's data-dependent approach to easing policy, as reported by TradingView. A surprise 50-basis-point reduction, however, could trigger broader market turbulence, particularly in equities and bonds, as investors reassess risk appetite, as a Coinpedia report noted. Analysts at Bitget noted that lower borrowing costs typically drive capital into risk assets like Bitcoin and Ethereum, with potential short-term rallies of 5%-10% anticipated if the cut materializes, TradingView reported.

Bitcoin's recent inflows underscore its role as a hedge against macroeconomic uncertainty. The cryptocurrency attracted $931 million in new capital last week, contributing to year-to-date inflows of $30.2 billion, while Ethereum faced $169 million in outflows, Coinotag reported. Regional dynamics also played a role, with the U.S. and Germany leading global inflows at $843 million and $502 million, respectively, as institutional investors reallocated capital toward digital assets, the Coinotag report said. Solana and XRP also saw modest inflows, though activity has cooled in anticipation of U.S. ETF approvals that could reshape market structure.

The Fed's decision will have cascading effects beyond crypto markets. A 25-basis-point cut is expected to weaken the dollar against other major currencies, with the euro gaining 0.09% against the greenback and the yen rising 0.11%, according to the FXStreet forecast. This could spur capital rotation into emerging markets and commodities, while a failure to cut rates as anticipated risks triggering a sharp sell-off in equities and crypto assets, as a Coinpedia piece warned. The central bank's communication, particularly Chair Jerome Powell's post-meeting press conference, will be critical in shaping market expectations for the remainder of the year.

As the Fed prepares to act, speculation about its next chair has intensified. President Donald Trump has narrowed his list of potential replacements for Jerome Powell to five candidates, including current Fed Board members and external figures like BlackRock's Rick Rieder, according to a Fast Company profile. The choice will influence the Fed's stance on inflation, labor markets, and growth, with implications for global financial conditions and the dollar's trajectory in 2026.