Bitcoin, Ether Rebound as Dollar Strengthens Amid Trump Tariffs, Inflation Concerns

Major cryptocurrencies showed mixed price action early Friday as the U.S. dollar strengthened following President Donald Trump’s announcement of sweeping new tariffs. Bitcoin (BTC) briefly dipped to $114,290 before rebounding to around $115,900, while Ether (ETH) recovered from $3,616 to trade near $3,690, according to CoinDesk data.

The volatility comes as the U.S. Dollar Index (DXY) climbed above 100, its highest level since late May, driven by expectations of tariff-led inflation and tighter financial conditions. Robin Brooks of the Brookings Institution noted that tariffs are now fueling inflationary pressures, reversing earlier market expectations.

Trump’s new tariff plan maintains a 10% universal rate for countries with a U.S. trade surplus and imposes higher floors of 15% or more on others, particularly impacting Southeast Asian exporters. These measures add to inflationary pressures already reflected in June’s core Personal Consumption Expenditures (PCE) index, which rose 2.8% year-over-year, its highest since February.

The Federal Reserve recently kept rates steady at 4.25%, signaling caution despite political pressure for cuts. Market odds of a September rate cut have fallen sharply, with traders now closely watching Friday’s U.S. nonfarm payrolls data for clues on future policy shifts.

The Japanese yen also weakened past 150.50 per dollar, its lowest in four months, after cautious comments from Bank of Japan Governor Kazuo Ueda. Analysts warn that both yen and Bitcoin could face heightened volatility depending on payroll results. A softer labor report could boost liquidity and potentially drive BTC higher, with long-term targets of $150,000 to $200,000 still in play this cycle.

This evolving macroeconomic backdrop continues to shape cryptocurrency market sentiment and near-term price trajectories.