US Dollar and Bitcoin Price Analysis: Strong Support at 104.799 as Crypto Sentiment Soars

How Is the Dollar Responding to Trump’s Election?

The U.S. dollar surged to a four-month high against major currencies on Tuesday as markets digested the economic and foreign policy proposals expected from President-elect Donald Trump. Meanwhile, bitcoin reached a record high as traders anticipate a supportive stance toward cryptocurrency under Trump’s administration. In contrast, the euro weakened amid concerns about potential U.S. tariffs and economic uncertainty in Europe.

What Are the Dollar’s Key Levels and Drivers?

The U.S. Dollar Index (DXY), which tracks the dollar against six major currencies, climbed 0.41% to 105.935, marking its highest level since July. The dollar’s upward momentum is currently testing resistance levels at 106.130 and 106.517, while support is observed at 104.799. The rally reflects market optimism about Trump’s election, which is seen as supportive for higher yields and a stronger economic outlook.

“The market is pushing U.S. equities, U.S. interest rates, and the dollar higher,” stated Alvin Tan, Head of Asia FX Strategy at RBC Capital Markets. Reports that Trump may appoint Senator Marco Rubio as Secretary of State and Representative Mike Waltz as National Security Adviser—both known for a hardline stance on China—reinforced market expectations of a more hawkish U.S. foreign policy, especially toward Beijing.

Will Pro-Crypto Policies Boost Bitcoin Further?

Bitcoin rallied to an all-time peak of $89,982 on Tuesday before settling at $88,561, as cryptocurrency advocates expect a favorable regulatory environment under Trump. Gautam Chhugani, an analyst with Bernstein, noted, “We are in a regulatory tailwind zone now,” adding that a crypto-friendly Securities and Exchange Commission could soon emerge. Trump has previously committed to making the U.S. the “crypto capital of the planet,” which has further boosted sentiment in the sector.

Why Are Treasury Yields Rising as Rate Cut Odds Decline?

U.S. Treasury yields rose as investors speculated on a prolonged high-rate environment. The 10-year Treasury yield rose over 8 basis points to 4.39%, while the 2-year yield climbed to 4.334%. Last week’s rate cut by the Federal Reserve has not fully convinced markets, as expectations now tilt toward prolonged stability or even higher rates under Trump’s administration. FedWatch tool data indicates a reduced 65% probability for another quarter-point cut at the December meeting, down from nearly 80% a week ago.

Market Outlook

Looking forward, the dollar appears set to maintain its strength, supported by rising Treasury yields, Trump’s assertive trade policies, and declining Fed rate-cut expectations. Inflation data due later this week, including the consumer and producer price indices, will be closely watched, with CPI expected to rise by 2.5% year-over-year, potentially reinforcing the dollar’s upward momentum. If economic data and Fed commentary signal resilience against inflation, the DXY could see continued gains.