US Dollar flat ahead of record 2-year note auction – BBH
Source Fxstreet
Analysts at BBH share their near-term outlook for the US Dollar.
Dollar rally should continue
"The dollar is trading flat ahead of a record 2-year note auction. DXY is trading flat near 106.087 but remains on track to test the November 1 high near 107.113."
"The dollar rally should continue as data confirm persistent inflation and robust growth in the US This backdrop along with upcoming heavy UST supply should keep upward pressure on US yields, which would be positive for the dollar. We believe that while market easing expectations have adjusted violently this month, there is still room to go. When the market finally capitulates on the Fed, the dollar should gain further."
"US yields remain elevated ahead of heavy supply. The 2-year yield is trading at 4.99% and on track to test the October high near 5.26%, while the 10-year yield is trading near 4.61% and on track to test the October high near 5.02%. Heavy supply could help push yields higher. Treasury auctions a total of $183 bln in 2-, 5-, and 7-year notes this week. The first leg is today with $69 bln of 2-year notes to be auctioned. Bid/cover ratio was 2.62 at the previous auction, while indirect bidders took 65.8%. The auctions continue tomorrow with $70 bln of 5-year notes and end Thursday with $44 bln of 7-year notes."
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year.
Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
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