The EURUSD currency pair, which is tracked by the Euro FX futures (6E), broke to a multi-year low on Dec. 15, but so far the price hasn't followed through to the downside. This puts the euro right at the bottom of a large range that began in early 2015.
Downside momentum is on the side of the bears, and a breakout has occurred to the downside. If the price continues lower, confirming that this is a legitimate breakout, the target is 0.95. This is based on the approximate height of the large range in the euro futures contract, subtracted from the breakout point which is close to 0.95. That's a long-term target, which could take a year or more to reach. The target also depends on the price continuing to move lower, which it hasn't done yet.
Figure 1. Continuous Euro FX Futures Daily Chart
Anyone who bought euros since the start of 2015 was in a losing position on Dec. 15, and the move to multi-year lows on Dec. 15 likely triggered all the stop loss orders of short-term bullish traders. The counter-argument is that if the price fails to follow through to the downside, the euro could see a substantial pop to the upside. The move would trap all the traders who went short recently, and incentivise all those who are bullish to get back in at one of the best prices in years.
Previous rallies off this support have taken the price to at least 1.0850 before a significant drop occurs again. Most rallies have exceeded 1.10. Therefore, there is also a limited risk bullish trade, with a stop loss placed below the new low of 1.04125 on the March contract. The long-term trend is down though, and momentum still favors the bears. Further downside helps confirm a breakout. While this confirmation may occur this year, with the holiday season approaching it may not be till next year that we really get to see if this range continues or if this is indeed a major break lower in the euro.