The U.S. dollar index (DXY) faced further declines on Tuesday, hovering just above a significant long-term support level established since the 2008 financial crisis. This level has been tested several times, with the most recent tests occurring in July and September 2025.
Since Donald Trump's election in November 2024, the dollar initially surged but has since dropped sharply throughout the early months of 2025. Despite the dollar's struggles, commodities like gold, silver, and copper reached new record highs on Tuesday, while the cryptocurrency market, particularly bitcoin, has suffered considerable losses.
Pressure is mounting on the U.S. Federal Reserve to consider lowering interest rates, particularly from President Trump, amid tightening monetary policies from several foreign central banks, including the Bank of Japan. This divergence in policy approaches raises concerns that the dollar might breach its critical support level.
Should the dollar fall below this level, it could potentially trigger a significant reversal in the ongoing downtrend of cryptocurrencies, which have not benefitted from the dollar's weakness thus far.