The US dollar is sliding toward its largest weekly decline since April, and crypto markets are throwing a quiet party in response.
After the Bureau of Labor Statistics reported that the US economy added just 57,000 nonfarm jobs in June, well below market expectations, the dollar index (DXY) tumbled toward two-week lows. The weak labor print effectively took the air out of rate-hike expectations that had been building since mid-June, when hawkish signals from Federal Reserve Chair Kevin Warsh pushed the DXY to 13-month highs near 101.40-101.80.
The jobs miss and what it means for rates
The CME FedWatch tool tells the story clearly. Before the July 2 report, markets were pricing in roughly 65% odds of a September rate hike. After the data dropped, those odds fell to around 50%.
The USD/JPY pair eased from multi-year highs near 162, offering some relief to the Japanese yen, which had been under relentless pressure from the dollar’s strength throughout June.
Bitcoin and Ether stage a convincing rebound
Bitcoin’s week tells the whole story of shifting macro sentiment. The largest cryptocurrency hit a low of $57,750 on Tuesday, when rate-hike anxiety was still dominating the narrative. By Friday, it had climbed to $61,600, a recovery of 6.5% in just a few days.
Ether did even better. The second-largest crypto asset surged 11.5% from its Tuesday lows over the same period, outpacing Bitcoin’s recovery by a significant margin.
The rally wasn’t limited to the blue chips. Altcoins including Cardano, Zcash, and Dash all posted gains following the jobs report.
From hawkish peak to dovish pivot
To understand why this week’s reversal feels significant, you need to rewind to mid-June. Fed Chair Kevin Warsh had been striking a notably aggressive tone on inflation, and markets responded by pricing in higher odds of continued tightening. The DXY surged to 13-month highs in the 101.40-101.80 range, and crypto markets buckled under the pressure.
Bitcoin’s slide to $57,750 earlier this week was a direct consequence of that hawkish buildup. The June jobs report changed that calculus in a single morning, with a miss of this magnitude adjusting rate expectations and introducing genuine uncertainty about whether the Fed’s tightening cycle has already gone too far.
What this means for crypto investors
A 50% probability of a September hike is not the same as zero. The Fed hasn’t actually changed its policy stance, and one weak jobs report doesn’t constitute a trend. Warsh has shown willingness to maintain hawkish positioning even when individual data points suggest softening.
If the next jobs report comes in hot, or if inflation data surprises to the upside, the dollar could reclaim its recent highs quickly. Bitcoin’s 6.5% bounce and Ether’s 11.5% surge are happening within a broader downtrend that started when the Fed turned hawkish in June.