USD sentiment is retreating from extreme readings
The USD's small bounce has caused dollar sentiment to bounce back from extreme readings.
When Dollar Optix cycled from 20 to 40 in the past, the USD Index usually fell further over the next 2 weeks. Most of these historical cases were from pre-2000, when Dollar Optix was more volatile:
If we only look at the historical cases from 2000-present, the USD Index's forward returns were even more bearish. Granted, this is mainly because most of the historical cases occurred in the great USD bear market of 2002-2007:
As for gold, this led to mixed returns:
But once again, if we only look at cases from 2000-present, this was bullish for gold over the next year. Once again, that's because all of the historical cases occurred during a great bull market for precious metals.