MEDIUM TERM DOLLAR SHORTThe dollar has gone up too fast, too quickly.
Technically:
1) Outside 800-period BB on the 4H chart.
2) Divergence at the 100.2 level.
3) The 100-100.5 region is strong resistance on the daily chart - we were there in December 2015 after which there was a major correction to the downside.
4) Missed pivot point at 95.5 is the target.
Fundamentally:
The promise of fiscal stimulus is the main driver of dollar strength, with a rate hike in December being almost fully priced in to the market (91%). The market is also pricing in further rate hikes in 2017.
However, Trump's policies remain uncertain.
Furthermore, in Dec 2015 the market was pricing in multiple hikes in 2016. These never came. A similar situation might occur now - since increasing rates too soon, too quickly might put pressure on credit and equities.
Global risks remain high, and the dollar will sell off in the event of more global uncertainty.
