Recent developments suggest the USDX has reached a critical juncture. The index has moved into a confluence of long-term support levels, and its decline following comments by former President Donald Trump echoes a similar drop in early 2018 after remarks by then-Treasury Secretary Steven Mnuchin—an event that marked a significant bottom for the dollar.
Is the Bottom Fully Formed?
While these signals suggest a potential rally, it’s too early to confirm that the bottom has fully formed. Historically, bottoms in the USDX don’t materialize instantly. Instead, the index tends to trade sideways before rising decisively. A well-established 3-4 year cycle in the USDX further supports the likelihood of a delayed but strong rebound.
Currently, we are approximately 32 trading days past the initial low—significantly less time than previous bottoming phases. If historical patterns hold, it could take another 18 to 28 sessions for a second bottom to form, aligning with cyclical expectations.
Short-Term Volatility, Long-Term Potential
Although the dollar’s uptrend remains intact, near-term sideways movement is likely. Volatility remains high on an intraday basis, but medium-term fluctuations are relatively muted. This back-and-forth behavior might seem uneventful, but it offers valuable insights—especially when viewed alongside gold and mining stocks.
Geopolitical factors such as tariffs and ongoing stock market instability continue to support the dollar, meaning a renewed rally could begin at any time. However, even if the USDX stays range-bound in the near term, its medium-term outlook remains decidedly bullish.
Implications for Gold and Mining Stocks
This temporary consolidation in the dollar has created favorable conditions for gold-related assets. Mining stocks, in particular, have responded strongly, outperforming gold itself. This relative strength suggests that investor sentiment remains positive, even amid uncertainty in the USDX.
One mining company stands out with a particularly compelling technical setup. It has recently broken through key resistance levels, confirmed the breakout, and is showing strong relative performance compared to the VanEck Gold Miners ETF (GDX). Even if the dollar begins to rally, this stock may continue to rise.
In fact, early gains since entering long positions suggest the potential for an additional 25% upside—unleveraged—before reaching the target profit level. While no outcome is guaranteed, this could materialize as soon as this month.
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