Dollar takes a breather ahead of Fed, bitcoin perks up

The dollar was becalmed on Wednesday, though investors looking ahead to 2026 were starting to position for U.S. rate cuts to weigh on the greenback while bitcoin recouped some of its losses and hovered near a two-week high.

A sharp rebound for bitcoin helped investors get somewhat in the mood for taking on a bit more risk. The biggest cryptocurrency by market value rose 2% on Wednesday to a two-week high of $93,633.70 after a 6% rise in the previous session.

Bitcoin had slumped at the start of December after a woeful November when it fell more than $18,000 as a record amount of money rushed out of the market, its largest dollar loss since May 2021, when a number of cryptocurrencies collapsed.

Tony Sycamore, market analyst at IG, said as long as bitcoin holds above the $80,537 level, supported by the lows hit in April during tariff uncertainty, “we look for another leg higher towards the $95,000 to $100,000 range, at which point we would shift to a more neutral bias in bitcoin.”

EURO SHINES AMID DOLLAR WEAKNESS

The euro cleared its 50-day moving average after euro zone inflation came in very slightly above expectations on Tuesday, and it last bought $1.1640, up 0.12% on the day ahead of a slew of manufacturing data from Europe.

The single currency is up over 12% this year, on pace for its biggest annual gain since 2017, benefiting from a weak dollar due to tariff uncertainties earlier in the year and lately rising odds of U.S. rate cuts.