Mapping the Market: Euro showing potential for a significant breakout

The euro has stumbled against the dollar in recent months, especially since the Iran war erupted, but these losses have unfolded inside a wide price range that has largely held for more than a year. Now, that range may be nearing a breaking point.

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The single currency's monthly moves have been boxed in between two long-term moving averages, which function as a ceiling and a floor for price action. These are essentially long-running average price trackers that smooth out short-term noise to reveal the bigger underlying trend.

The euro tested the edges of this range twice — in May 2025 and again in January 2026 — but on both occasions it closed back inside the envelope by month end, according to data supplied by LSEG, reinforcing the strength of the boundaries.

The 200-month moving average, the top of the range, is the more significant of the two barriers given the extended history it captures, making it the tougher one to crack. With the euro's monthly bias still tilted lower, the more probable scenario is a break beneath the 100-month average — the weaker tracker — which marks the bottom of the range.

Should that occur, the monthly Ichimoku cloud, a charting system mapping trend, momentum and support and resistance zones, points to a target of 1.0940.

There is a counter-risk though: fading bets on Federal Reserve rate hikes could weaken the dollar instead. A break above the tougher 200-month average could signal a shift into a higher trading range, with the January high of 1.2084 as the next marker.