Some banks, however, anticipate a sustained strength in the dollar due to divergent interest rate expectations and the looming threat of U.S. tariffs. Societe Generale and Scotiabank hold the view that the dollar will remain firm amidst these uncertainties.

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The DXY experienced an uptick from 102.35 on March 8 to a five-month peak of 106.52 last week, per data from TradingView. Although it has slightly retraced to 105.70 since then, this retreat has fueled optimism among cryptocurrency enthusiasts, particularly Bitcoin bulls.

"DXY dollar index hit resistance at 106 as expected and has started to turn over. A move back towards 102-103 will turbocharge this rally. The timing makes sense because Bitcoin is primed to move to $90,000 in the short term. Longer term, I expect DXY at 92, perhaps by late 2025," commented Mike Alfred, a value investor and founder of Alpine Fox LP.

The dollar's influence extends beyond domestic affairs, as it serves as a global reserve and invoicing currency, impacting international debt, non-bank borrowing, and global trade. A stronger dollar makes USD-denominated debt costlier, disincentivizing risk-taking in financial markets, while a weaker dollar has the opposite effect. Consequently, Bitcoin and the broader crypto market have historically moved inversely to the DXY, akin to stocks and gold.

Jan Happel and Yan Allemann, co-founders of Glassnode, observed signs of a potential downturn in the dollar, which could propel the crypto market upwards. They noted an "expanding triangle" pattern in the DXY, indicating a forthcoming decline and subsequent boost for cryptocurrencies.

While the sentiment among cryptocurrency traders remains optimistic, some banks anticipate a different trajectory for the dollar. Societe Generale's Cross Asset Research Team, led by Kit Juckes, predicts the DXY's ascent to a peak between 107 and 110, citing expectations of the Federal Reserve delaying rate cuts until 2025.

Scotiabank echoes a similar sentiment, suggesting that a prolonged period of unchanged rates by the Federal Reserve could further bolster the dollar's strength.

The possibility of an escalation in the U.S.-China trade war looms large, which could further fortify the U.S. dollar. Proposed tariff hikes by both current and former U.S. presidents could potentially stimulate a rally in the DXY, according to Barclays.

As the market braces for potential shifts in the global economic landscape, Bitcoin enthusiasts closely monitor developments in the dollar's trajectory, anticipating their impact on the cryptocurrency market's momentum.