And no, I don’t mean Trump’s presidency, but that’s true as well.

I mean the rally in the USD Index and the declines in the precious metals and mining stocks.

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On a short-term basis, it might seem as if the rally was so huge that it's unsustainable. I agree; it was very sharp and nothing short of spectacular, but whether it's sustainable is a completely different matter.

To answer the question about this rally's sustainability, we need to zoom out and see what the situation looks like in general – not just in the case of the most recent price moves.

After all, a higher move might be excessive for a short-term move, but it might not be excessive at all when compared to the previous bigger uptrends.

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And that’s exactly what zooming out reveals.

The USD Index just invalidated its breakdown below the powerful, rising support line based on the 2011 and 2014 lows. There were three previous breakdowns below this line, all invalidated. They were all followed by sizable rallies in the USDX, but only one is really similar to what we saw in the previous months because of how long the USDX stayed below the line.

The only similar case is the 2020 breakdown and its invalidation that took place in early 2022. Back then, the USD Index continues to rally for about 15 index points. If the same happens again (note: I’m not writing about something completely new happening – I’m writing about the recent past being repeated), then the USD Index could rally to about 120 – it’s a critical, medium-term high.

Can the USD Index really move as high? Yes – it would be just history’s rhyme, nothing particularly new.

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