Bitcoin dips below $70,000 as Dollar Index hits 19-month high

The US dollar exhibited a near 19-month high on Friday, following a robust week of gains driven by heightened expectations of a more substantial Federal Reserve rate hike. This bolstered the Japanese yen, which approached the crucial 160 mark, prompting traders to anticipate potential intervention. Treasury yields experienced an upward trajectory as US President Donald Trump declared the US has no need for a deal with Iran, amid traders considering the likelihood of a more significant Federal Reserve rate hike in the upcoming month.

Two-year Treasury yields surged by 34 basis points over the past two sessions, marking the steepest two-day increase in three and a half years. The euro experienced a minor decline of 0.1 percent to $1.1049, hovering close to its lowest level versus the dollar since April 2025. Over the week, the euro slipped by 0.8 percent, on course for its most substantial weekly decline since late September.

In the past week, Federal Reserve officials cautioned that US inflation remains notably high, with some expressing willingness to consider a 50-basis-point rate increase if inflation pressures persist. Traders now assign a 14.5 percent probability of a sizable rate hike next month, up from 0 percent last week, as indicated by the CME FedWatch tool.

Additionally, investors remain vigilant over disruptions in the technology sector, following the departure of Nvidia CEO Jensen Huang, a development compounded by funding and regulatory challenges. Analyst Carol Kong of Commonwealth Bank of Australia cautioned that a sharp downturn in equity markets could adversely impact the US dollar.

However, she believes there is a potential for the dollar to maintain its momentum in the near term, contingent on forthcoming Federal Reserve comments. The Japanese yen remained relatively stable at 159.875 per dollar, nearing its lowest level since early September, generating concerns about possible intervention. Japanese Finance Minister Satsuki Katayama stated that the government would respond appropriately to currency volatility.

The dollar index, representing the greenback against a basket of currencies, dipped by 0.05 percent to 103.17, maintaining its highest level since April 2025. The Australian dollar witnessed a decline of approximately 2.5 percent over the past month, ranking as the worst-performing G10 currency against the US dollar and the sole currency for which rate cuts are being priced in for 2025.

It closed at $0.68 in early trading. The dollar was relatively stable against the Swiss franc at 0.835, hovering near a one-month high. US crude futures experienced a 2.55 percent increase on Thursday following intensified attacks by Yemen's Iran-aligned Houthi group on Saudi energy infrastructure and ongoing shipping disruptions in the Strait of Hormuz.