Two things have begun to worry me about the strong USD story:
First of all, the implied probability of a March 15 Fed rate hike jumped from roughly 30% to almost 90% within a few days on no important news whatsoever. The biggest jump occured after Trump's address to Congress and comments by New York Fed President Dudley that the case for Fed tightening had become a lot more compelling. But come on, we've seen comments like that many times before. They haven't exactly been a reliable predictor of future Fed actions. I'm afraid the market is overreacting to comments by central bankers and politicians. An almost 90% probability of a rate hike amounts to a near-certainty expectation that we will see a hike in two weeks. The risk of disappointing that expectation is enormous.
Secondly, EURUSD has repeatedly failed to break through the important support level around 1.0520. While we would probably see an extended downmove to at least 1.0341 if that support were finally taken out, I must assert that a failure to do so would likely result in a similarly large move higher. This, too, suggests an increased risk for my EURUSD short position. I'm keeping the position on for now, but I'll probably close it out if the expected move lower doesn't materialize soon.
Realized YTD return: +4.34% from 3 trades
Total YTD return: +6.96% from 4 trades