Following the previous Bitcoin analysis ( https://www.gomarkets.com/au/articles/economic-updates/bitcoin-usd-technical-analysis/ ), bitcoin continues to break below pattern after pattern, recently breaking out and re-testing a descending flag pattern on a 4h time frame as seen below: With the next major support sitting around $17,619, it won’t be a surprise if bitcoin comes down to that area. Looking at the correlation between Bitcoin and Ethereum, the last 7 days of price action shows a correlation of.89, which is a positive value that indicates a positive correlation between the two. A positive correlation means that the two moves very similar to one another. [caption id="attachment_273298" align="alignnone" width="602"] (https://cryptowat.ch/correlations)[/caption] [caption id="attachment_273299" align="alignnone" width="527"] (https://cryptowat.ch/correlations)[/caption] For ETHUSD (Ethereum), making similar patterns to BTCUSD, has also recently broken out of a descending flag pattern, signalling a probable continuation of the 4h downtrend, there is a high probability of ETHUSD reaching the next major support around $1012.
By
Mark Nguyen
Account Manager
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2025 has seen a material decline in the fortunes of the greenback. A technical structure breakdown early in the year was followed by a breach of the 200-day moving average (MA) at the end of Q1. The index then entered correction territory, printing a three-year low at the end of Q2.
Since then, we have seen attempts to build a technical base, including a re-test of the end-of-June lows in mid-September. However, buying pressure has not been strong enough to push price back above the technically critical and psychologically important 100 level.
What the levels suggest from here
As things stand, the index remains more than 10% lower for 2025. On this technical view, the index may revisit the 96 area. However, technical levels can fail and outcomes depend on multiple factors.
US dollar index
Source: TradingView
The key question for 2026
The key question remains: are we likely to see further losses in the early part of next year and beyond, or will current support hold?
We cannot assess the US dollar in isolation and any outlook is shaped by internal and global factors, not least its relative strength versus other major currencies. Many of these drivers are interrelated, but four potential headwinds stand out for any US dollar recovery. Collectively, they may keep downside pressure in play.
Four headwinds for any US dollar recovery
1. The US dollar as a safe-haven trade
One scenario where US dollar support has historically been evident is during major global events, slowdowns and market shocks. However, the more muted response of the US dollar during risk-off episodes this year suggests a shift away from the historical norm, with fewer sustained US dollar rallies.
Instead, throughout 2025, some investors appearedto favour gold, and at other times, FX and even equities, rather than into the US dollar. If this change in behaviour persists through 2026, it could make recovery harder, even if global economic pressure builds over the year ahead.
2. US versus global trade
Trade policy is harder to measure objectively, and outcomes can be difficult to predict. That said, trade battles driven by tariffs on US imports are often viewed as an additional potential drag on the US dollar.
The impact may be twofold if additional strain is placed on the US economy through:
a slowdown in global trade volumes as impacted countries seek alternative trade relationships, with supply chain distortions that may not favour US growth
pressure on US corporate profit margins as tariffs lift costs for importers
3. Removal of quantitative tightening
The Fed formally halted its balance sheet reduction, quantitative tightening (QT), as of 1 December 2025, ending a program that shrank assets by roughly US$2.4 trillion since mid-2022.
Traditionally, ending QT is seen as marginally negative for the US dollar because it stops the withdrawal of liquidity, can ease global funding conditions, and may reduce the scarcity that can support dollar demand. Put simply, more dollars in the system can soften the currency’s support at the margin, although outcomes have varied historically and often depend on broader financial conditions.
4. Interest rate differential
Interest rate differential (IRD) is likely to be a primary driver of US dollar strength, or otherwise, in the months ahead. The latest FOMC meeting delivered the expected 0.25% cut, with attention on guidance for what may come next.
Even after a softer-than-expected CPI print, markets have been reluctant to price aggressive near-term easing. At the time of writing, less than a 20% chance of a January cut is priced in, and it may be March before we see the next move.
The Fed is balancing sticky inflation against a jobs market under pressure, with the headline rate back at levels last seen in 2012. The practical takeaway is that a more accommodative stance may add to downward pressure on the US dollar.
Current expectations imply around two rate cuts through 2026, with the potential for further easing beyond that, broadly consistent with the median projections shown in the chart below. These are forecasts rather than guarantees, and they can shift as economic data and policy guidance evolve.
Source: US Federal Reserve, Summart of Economic Projections
