The truth behind the rebound of the US Dollar Index: Rethinking global capital from 98.761

The US Dollar Index rose 0.12% to 98.761 on January 22nd. Behind this seemingly small increase lies a signal of global capital market re-pricing. Especially considering the previous pressure on the dollar due to Trump’s tariff threats, this rebound warrants in-depth analysis.

Specific manifestations of the dollar rebound

According to the latest data, the performance of the dollar against six major currencies has shown divergence:

Looking at this table, the dollar’s performance is actually “selective”—it has strengthened against the yen and Swiss franc, weakened against the euro and pound, and also weakened against the Canadian dollar and Swedish krona. What does this indicate?

Subtle shifts in risk sentiment

Based on recent market dynamics, the dollar has been under pressure lately. Threats from Trump to impose 10%-25% tariffs on Europe, disputes over Greenland, and other geopolitical factors have driven global funds into traditional safe-haven assets like gold and silver. Gold even rose to $4,690 per ounce on January 19th.

However, this dollar rebound, especially the strengthening against the yen and Swiss franc, reveals a detail: the market is reassessing risk. As traditional safe-haven currencies, the relative weakening of the yen and Swiss franc suggests that the dollar is still viewed as a “relatively safe” asset at certain times. This is not a sign of improved dollar fundamentals but rather a reflection of the increasing global uncertainty, where the dollar’s role as the world’s reserve currency continues to exert “attractiveness.”

Complexity of the macro background

Federal Reserve policy remains on hold

According to the latest news, the Federal Reserve is highly likely to hold steady in 2026, with the federal funds rate remaining in the 3.5%-3.75% range. Market pricing via the CME FedWatch tool indicates a over 95% probability that the January meeting will keep rates unchanged. This suggests no policy changes in the near term to push the dollar higher.

The double-edged sword of trade friction

Trump’s tariff threats may seem to hit the dollar, but in reality, they are also changing capital flows. Europe is preparing retaliatory tariffs, which could push up global inflation expectations. In this environment, the dollar, as the “least bad option,” might actually attract capital—explaining why the dollar index can rebound after being under pressure.

Potential impact on the crypto market

What does this signal mean for cryptocurrencies? Based on previous observations, the relationship between the dollar index and Bitcoin is inverse—when the dollar strengthens, Bitcoin is usually suppressed; when the dollar weakens, Bitcoin benefits.

But the current situation is more complex:

• Short-term: The dollar rebound may exert some pressure on Bitcoin, but the magnitude is limited (since the dollar’s rebound itself is mild).
• Medium-term: Rising global uncertainty and geopolitical risks will boost demand for safe-haven assets. Bitcoin, as a “new type of safe-haven asset,” is strengthening its position.
• Liquidity perspective: The Fed maintaining stable policy means liquidity conditions won’t suddenly tighten, which is relatively friendly to risk assets.

Based on previous analysis, when macro uncertainty increases, the cryptocurrency market may experience short-term volatility, but in the long run, the “safe-haven narrative” for Bitcoin and other hard assets is gaining momentum.

Noteworthy details

The dollar index closed at 98.761, which is not particularly high. Comparing historical data, the dollar index once broke above 103 in 2023. The current level indicates that while the dollar has rebounded, it remains in a relatively moderate range.

This suggests that the market has not fully shifted to an expectation of “strong dollar,” but is instead weighing different assets against each other. Especially when Europe faces tariff pressures and Japan faces political uncertainty, the dollar’s “attractiveness” is more driven by “relative safety” rather than “fundamental strength.”

Summary

The dollar index rose 0.12% to 98.761, fundamentally reflecting a re-pricing of global capital amid uncertainty. This is not a sign of improved dollar fundamentals but rather a flow of risk sentiment across different assets. For the crypto market, the short-term dollar rebound may create some pressure, but in the long term, rising geopolitical and economic uncertainties are reinforcing Bitcoin’s appeal as a “hard asset.” Future focus should be on whether the dollar index can hold above 99 and the final implementation of Trump’s tariff policies.