The US dollar rebounded 0.28% to close at 99.134, quickly recovering from the Powell event shock.

The US Dollar Index experienced a sharp decline on the 12th and quickly rebounded. According to the latest news, the US Dollar Index rose 0.28% on January 13th, closing at 99.134. This rebound marks a rapid shift in market sentiment and also reflects the resilience of the dollar in the global financial markets.

Turning Point of the Dollar Rebound

From decline to rise in the 24 hours

The trend of the US Dollar Index has shown a stark contrast over the past two days. According to relevant information, the dollar index briefly fell to 98.89 on the 12th, with a significant decline. But just one day later, the dollar index rebounded to 99.134, fully recovering the decline and reaching a new high.

What is the key turning point behind this? The dollar’s decline on the 12th was mainly due to news of Powell being under criminal investigation. This event temporarily sparked concerns about the Fed’s independence, leading to short-term selling of the dollar and a rise in safe-haven assets like gold and silver. However, market reactions are often exaggerated, and the rebound on the 13th indicates that investors are reassessing the actual impact of this event.

Collective Pressure on Non-USD Currencies

Another manifestation of the dollar rebound is the general weakening of non-USD currencies. According to quick news data:

The euro and pound weakened against the dollar, while safe-haven currencies like the yen and Swiss franc strengthened. This divergence reflects a renewed market recognition of the dollar’s stability.

Market Background and Logic

Fed Policy Expectations Support the Dollar

The deeper reason for the dollar’s rebound is related to expectations of Fed policy. According to relevant information, US non-farm payroll data reinforced expectations that the Fed would keep interest rates unchanged in January. In the context of the end of rate hikes and declining expectations for rate cuts, the attractiveness of the dollar relative to other currencies increased.

Additionally, December inflation data was viewed by the market as “mildly positive,” further solidifying expectations that the Fed would maintain current policies in the short term. The Fed’s stance of maintaining high interest rates supports the dollar’s strength.

Geopolitical Risks Boost Safe-Haven Sentiment

Although the dollar experienced a short-term decline on the 12th due to political events, rising geopolitical tensions have provided long-term support for the dollar. According to relevant information, escalating global geopolitical risks have driven capital flows into hard assets and safe-haven currencies, naturally benefiting the dollar as the world’s reserve currency.

Impact on Crypto Assets

BTC Faces Dollar Pressure

The dollar rebound exerts direct pressure on crypto assets. Based on analysis from relevant information, BTC shows a perfect negative correlation with the dollar index. A strengthening dollar means that BTC priced in USD faces downward pressure.

Relevant information clearly states that the four-year cycle of BTC has been broken, replaced by a macro cycle closely tied to the dollar index. Historical data shows that major bull markets in BTC in 2013, 2017, and 2020 were accompanied by declining dollar cycles. Conversely, a strengthening dollar often suppresses BTC performance.

Short-term Suppression and Long-term Logic

Although the short-term rebound of the dollar puts pressure on BTC, relevant information also mentions that the long-term trend of the dollar index remains in a downward trend. As long as this long-term logic remains unchanged, BTC’s long-term upward trend will not reverse. But this means that in the short term, investors need to pay attention to the dollar index’s movements rather than simply chasing highs.

Summary

The dollar index’s rebound, though modest at only 0.28%, signals a shift in market sentiment. From a low of 98.89 on the 12th to a rebound to 99.134 on the 13th, the dollar quickly recovered after political shocks, reflecting market confidence in the stability of Fed policies. The collective weakening of non-USD currencies further confirms this trend.

For crypto assets, the dollar’s strength means short-term pressure. But in the long run, the overall downward trend of the dollar index remains, leaving room for crypto performance to evolve. The key is to closely monitor Fed policy signals and the true direction of the dollar index, rather than being misled by short-term volatility.