Bitcoin Updates: Dollar Rises Amid Trade Optimism, Crypto Awaits as Fed Decision Approaches

The U.S. dollar surged to its highest levels in years on Monday, supported by growing confidence in trade prospects and the near-unanimous expectation of a Federal Reserve rate reduction ahead of its crucial policy announcement. The EUR/JPY pair, often used as a barometer for dollar strength, hit a record peak of 178.15 before easing back to 177.80, maintaining a strong upward trend as technical signals point to possible further advances, according to an

. At the same time, the cryptocurrency sector braced for heightened swings as investors weighed central bank moves and economic indicators, with drawing $931 million in new investments last week amid hopes for looser monetary policy, as noted in .

The dollar’s rally is fueled by several elements, such as a shrinking trade gap between the U.S. and China and increased appetite for safe-haven assets. The EUR/JPY pair continues to trade within an upward channel, bolstered by its nine-day exponential moving average (EMA) at 176.78 and a 14-day relative strength index (RSI) close to 70, which experts see as evidence of strong short-term momentum, per the FXStreet outlook. Should the pair break above 178.15, it could target 182.90, while a dip below the EMA would bring the 50-day EMA at 174.35 into focus, possibly indicating a change in medium-term direction.

The Federal Reserve’s imminent policy decision, expected later today, has become a central concern for global investors. Derivatives markets now price in a 98.3% chance of a 25-basis-point rate cut, which market participants interpret as the Fed maintaining its data-driven approach to easing, according to TradingView. However, a surprise 50-basis-point cut could spark broader volatility, especially in stocks and bonds, as investors reevaluate their risk exposure, as

highlighted. Bitget analysts observed that lower interest rates generally encourage flows into riskier assets like Bitcoin and , with short-term gains of 5% to 10% possible if the rate cut occurs, .

Recent capital inflows into Bitcoin highlight its appeal as a safeguard against economic uncertainty. The digital asset attracted $931 million in fresh investments last week, bringing total inflows for the year to $30.2 billion, while Ethereum experienced $169 million in withdrawals,

. Regional trends were also significant, with the U.S. and Germany leading global inflows at $843 million and $502 million, respectively, as institutional investors shifted more capital into digital assets, according to Coinotag. and also posted moderate inflows, though activity has slowed as the market awaits potential U.S. ETF approvals that could alter the landscape.

The Fed’s policy move will have ripple effects beyond cryptocurrencies. A 25-basis-point reduction is projected to weaken the dollar against other major currencies, with the euro up 0.09% and the yen gaining 0.11% versus the greenback, according to FXStreet. This could prompt investors to rotate capital into emerging markets and commodities, while an unexpected decision to hold rates steady could trigger sharp declines in stocks and digital assets, as warned by Coinpedia. The central bank’s messaging, especially Chair Jerome Powell’s remarks after the meeting, will be pivotal in shaping market outlooks for the rest of the year.

As the Federal Reserve prepares to make its move, speculation over its next leader is intensifying. President Donald Trump has reportedly narrowed his choices for Jerome Powell’s successor to five individuals, including current board members and outside candidates such as BlackRock’s Rick Rieder, according to

. The selection will shape the Fed’s approach to inflation, employment, and economic growth, with far-reaching consequences for global markets and the dollar’s path into 2026.