The US dollar extended its relentless rally on Tuesday, reaching a fresh 13-month high against major currencies and pushing the USD/KRW pair above 1,545 won for the first time in 19 days. The greenback's surge is being driven by growing market conviction that the Federal Reserve will keep interest rates higher for longer, a narrative reinforced by recent resilient US economic data and hawkish Fed commentary.
According to the CME FedWatch Tool, the probability of a rate cut at the June meeting has dropped below 50%, marking a significant repricing from just a month ago. This shift has widened the interest rate differential between the US and other major economies, making dollar-denominated assets more attractive and fueling demand for the safe-haven currency amid global risk aversion.
Against the South Korean won, the dollar touched 1,545.00 before settling at 1,544.56, up 0.85% from the previous close. The Bank of Korea (BOK) is closely monitoring the won's rapid depreciation, which threatens to raise import costs, stoke inflation, and squeeze corporate margins in the export-reliant economy. BOK officials have signaled readiness to intervene if the currency's decline becomes disorderly, adding another layer of uncertainty for global investors.
The dollar's strength is creating broad headwinds for risk assets, including cryptocurrencies. A persistently strong dollar typically siphons capital away from speculative markets, dampens commodity prices, and pressures emerging market currencies—all factors that can weigh on crypto sentiment. While Bitcoin and altcoins have occasionally decoupled from traditional macro forces, the current macro backdrop of hawkish Fed expectations and global risk aversion presents a challenging environment for sustained crypto rallies.
Traders are now eyeing the 1,550 and 1,600 won levels for USD/KRW and the 106.00 mark on the DXY as key resistance points. Any surprise dovish shift from the Fed or strong intervention from Asian central banks could spark a sharp reversal, but for now, the dollar's dominance remains a key macro factor for crypto investors to watch.
