What actually happens is that due to various (emotional = technical) reasons, sentiment gets so bad that people start to feeling that the outlook for the USD Index is bearish (not actually based on forecasts, but by looking back and extrapolating the most recent price movement), and then they do everything they can to justify this outlook.
And since there are plenty of theories to choose from, they take one or more, and claim that the USD index is to go to fall for these reasons, when in reality (which happens at a subconscious level) they expect the USD index to go lower just because it has gone lower in the past.
This seems to have been the case lately.
And you know what happens when sentiment for a particular market is extremely bad? The bottom has been reached, and it is precisely because sentiment is extremely bad. Anyone who was on the sidelines is not only out of the long positions, but perhaps even out of the short positions. Conversely, when everyone and their brother thinks that a certain market can only go up because of a new paradigm (stock market and AI stocks, anyone? Crypto, perhaps?), the top is formed. Okay, sometimes the top takes longer to form, like Bitcoin – it took years.
Before I present you with the USD Index charts, let me state the (hopefully) obvious:
A decline is not bearish.