The dollar index (DXY) climbed to a 13-month high on June 24, driven by renewed speculation about a Federal Reserve rate hike. The Fed held its benchmark rate steady at 3.75% following the June 17 FOMC meeting, while markets are now pricing in roughly 32% odds of a 25 basis point hike at the July 29 meeting. The fed funds rate could rise to approximately 3.9% by October, marking the first increase since the aggressive tightening cycle of 2022-2023. This dollar strength is pressuring Bitcoin, which was trading below $65,000 in mid-June, and broader risk assets. Stubbornly elevated energy prices, particularly oil, remain the key driver behind the hawkish repricing of rate expectations.
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