Analytical Report Style (For Research/Strategy Notes)
Dollar Weakness Deepens as DXY Breaks Below 98, Risk Markets Watch Crypto Rotation
A key technical and psychological threshold was breached Wednesday as the U.S. Dollar Index (DXY) fell beneath 98 for the first time in over three years — a move that reflects both near-term economic signals and longer-term structural concerns.
The dip follows cooling inflation, with May’s CPI print at 2.4% YoY, just under the 2.5% consensus. As a result, traders now almost universally expect a Fed rate cut in June, with CME FedWatch showing a 99.8% probability. Looser policy expectations, combined with global diversification away from dollar-denominated reserves, are accelerating pressure on the greenback.
While traditionally strong dollar regimes have tightened liquidity and constrained crypto markets, the current reversal may pave the way for digital assets to outperform. With bitcoin hovering above $105,000, analysts say a soft dollar, improving ETF flows, and reduced real yields could form a powerful bullish trifecta.
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