The U.S. Dollar Index climbed to roughly 102.5 on Monday, its highest level in nearly 18 months, as the euro slid toward a 17-month low on political turmoil in Spain and fiscal strain in France. Bitcoin held near $86,000 despite the tighter financial conditions.
The U.S. Dollar Index, which tracks the greenback against six major currencies, reached roughly 102.5 on Monday, its highest level in nearly 18 months. The index has climbed from around 99 in early September and now sits comfortably above its 200-day moving average, also near 99, signaling strengthening bullish momentum.
Euro slides on Spanish election and French deficit fears
The euro, which accounts for 57.6% of the DXY basket, is another major driver of the dollar's advance. The single currency has fallen toward 1.12, a 17-month low, as mounting fiscal and political concerns weigh on confidence.
France faces growing pressure over its deficit and borrowing costs ahead of next year's presidential election. Meanwhile, Spanish Prime Minister Pedro Sánchez has called a snap election for Nov. 29, adding to regional uncertainty.
Fed rate path keeps yields elevated
The Federal Reserve's September decision to raise rates by 25 basis points to 3.75% to 4% has helped underpin the dollar's strength. Markets are pricing in further tightening, with a target range of 4.5% to 4.75% by June 2027 emerging as the most likely outcome.
The rate rise comes alongside concerns over inflation, government borrowing and fiscal sustainability. Long-term U.S. yields have reached levels last seen more than two decades ago.
Bitcoin holds near $86,000 despite headwinds
A stronger dollar typically creates headwinds for risk assets by raising the cost of servicing dollar-denominated debt outside the U.S. and reducing overseas investors' purchasing power. Higher U.S. interest rates also make cash and government bonds more attractive, raising the hurdle for investing in stocks and bitcoin.
Despite these headwinds, bitcoin continues to hold around $86,000 after a strong start to October.
Source: CoinDesk
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