Any hardcore contrarian has to be tempted at this point. It’s just too easy to trash the dollar.
For what it’s worth, here are a few technical reasons why sentiment might be turning:
Traders Narrative: While US dollar sentiment has been extremely bearish for a few months, the US dollar index has just now managed to move above its 50 day moving average. The last time we saw such a tiny gleam of positivity from the dollar was back in April (and that didn’t work too well):
At best, the US dollar has taken the first tentative steps in the bottoming process. In which case, this simply deserves monitoring. At worst, this is not a signal but more ‘noise’ similar to the myriad counter trend mini-rallies we’ve seen. The reason the distinction is important is that all risky assets are correlated now thanks to the carry trade.