The greenback did retreat in H1 of 2016, adding credence to our view for further consolidation below 2015 high of 125.86 and indicated retracement targets at 116.16, 113.30, 112.00 and 110.00 had all met met, although the correction was a bit deeper than expected and pressed the pair to as low as 99.01 in mid-2016, dollar found renewed buying interest there and staged a strong rebound in Q4 2016, suggesting the correction from 125.86 has possibly ended at 99.01, hence consolidation with upside bias is seen for gain to 119.00 and 120.00, however, reckon 121.65-70 would hold on first testing. Only a break of resistance at 123.76 would confirm correction from 125.86 has ended, bring resumption of medium term rise from major low of 75.57 (formed back in 2011), then retest of 125.86 would follow. Looking ahead, a break above this level is needed to extend headway to 127.00, then 129-130.00 level but near term overbought condition should limit upside to 133.00 and price should falter below previous chart resistance at 135.18 (2002 high).
On the downside, whilst initial pullback to 115.00 cannot be ruled out, reckon downside would be limited to 112.90-00 and bring another rise later. Below 112.00 would bring pullback to 110.00 but downside should be limited to 107.00 and bring another rise later. Only a drop below 105.50-55 would defer and prolong choppy trading below 2015 high of 125.86, then weakness to 103.00 and then 102.00 would follow but still reckon downside would be limited to 101.00-10 and price should stay above said 2016 low of 99.01, bring another rise later. In the event dollar drops below 99.01 support, this would shift risk back to downside for the retreat from 125.86 to bring a stronger correction of the aforesaid rise from 75.57 low to 97.00 and possibly 95.80-85 but downside should be limited 94.75-80 (61.8% Fibonacci retracement of 75.57-125.86) and support at 93.79 should remain intact.