Trends trend, until they stop trending, at which point they generally consolidate for some time. We have seen this recently in crude oil which experienced a very large downtrend from June through January before consolidating during the past couple of months:
The chart of EUR/USD looks very similar to the WTI crude oil chart in terms of a large protracted downtrend with a market that becomes deeply oversold on numerous occasions only to end up falling further:
Utilizing various factors such as sentiment and the magnitude of the decline since the middle of last year I believe there is a high probability of a consolidation in both EUR/USD and the US Dollar Index over the next 2-3 months. The green and red lines are my guess of how this consolidation might unfold.
The fact that the dollar has drawn so much attention in recent weeks as it reached decade highs only adds to the potential for an extended rangebound period before the next large directional move. When markets garner an increase in attention and participants they have a strong tendency to move in such a way as to take the largest amount of money from the largest number of participants. This means that both the trend followers and bottom fishers alike are likely to end up being frustrated in US dollar markets for the next few months.
Read also: Frenetic Dollar Moves Frustrate