Economic reports like GDP, unemployment, and inflation from the eurozone and the US, as well as central bank decisions on interest rates, can cause major price fluctuations. Pessimistic forecasts allow for a decline to levels of 0.9530–1.0065 amid a strengthening US dollar and geopolitical instability. A sideways trend is also possible within the range of 1.0500–1.1000, reflecting a balance between key economic factors. The monetary policies of the European Central Bank and the US Federal Reserve in 2024 are characterised by similar approaches to fighting inflation, but with differences within the current economic environment. The ECB continues to cut interest rates gently, cutting them by 25 basis points in December 2024 to support economic growth and achieve its inflation target of 2 per cent. At the same time, the Technical analysis maintains a tighter monetary policy, with a high interest rate, which has a dampening effect on domestic demand and economic activity.
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Lower energy prices have enabled the eurozone economy to return to growth and the European Central Bank (ECB) to cut rates. We expect a return to potential growth by 2025, with inflation at 2% by mid-year. The current market situation is significantly influenced by the interest rate policies of both central banks – the European Central Bank (ECB) and the Federal Reserve (Fed). The divergence between the monetary policy orientations of both institutions has substantially determined the direction of the EUR/USD in recent years and will continue to be a decisive factor. As part of the technical analysis for EUR/USD in 2025, we will evaluate the location of key support and resistance levels, examine the formation of chart patterns, and analyze technical indicators. The EURUSD rate is shaped by interest rates, economic reports, inflation data, political statements, and demand for safe-haven assets.
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Basic Fundamental Analysis
Some analysts project sideways movement within a narrow trading range, while others expect the pair to soar. The recent tariff announcements are likely to weigh on the attractiveness of U.S. assets, and over the medium term, relative real yields are likely to rise in favour of the euro. “The ECB could cut rates, but the stagflationary dynamic in the U.S. is likely to be the more relevant driver for EUR/USD.
Factors affecting the EUR USD forecasts
The estimates vary, with some analysts suggesting a slight decline and others indicating a continuation of the upward trend. When formulating scenarios for the euro/dollar pair, experts take into account the impact of global economic conditions, monetary policy shifts, and inflation expectations. For those looking to engage with the forex market, opening an FXOpen account may offer valuable opportunities to leverage these insights into practical financial actions. The Fed’s current monetary policy aims to stabilise these economic conditions by maintaining the target range for the federal funds rate at 5.25 to 5.5 percent. While the Fed is prepared to keep rates steady to gain greater confidence that inflation is sustainably moving towards the 2% goal, they remain highly attentive to inflation risks. These tools enable us to identify trends, support and resistance levels, and potential overbought and oversold zones.
Markets grabbed that opportunity to price in two to three rate reductions this year. According to the latest forex forecasts for H2 2024, if you are searching for a star performer, look elsewhere than the euro. Aside from political uncertainty, eurozone activity surveys are starting to lose steam; and an ECB that relies on its own (optimistic) inflation projections can still cut twice in 2024. The zone around 1.03 USD deserves special attention as it not only represents the lower boundary of the long-term trend channel but also coincides with historical support levels.
Trump’s Trade Policies Hammer US Dollar. Forecast as of 17.03.2025
- Our forecasts are based on a combination of technical and fundamental analysis.
- The average values will likely remain above 1.35, and the “Buy” recommendation is maintained.
- Understanding the factors influencing the economies of the currencies being traded is pivotal for evaluating long-term market trends.
- BTC is testing a critical resistance level that could mark a fresh push toward record highs, while ETH remains supported by a key level, signaling potential for upward continuation.
- As a result, prices could remain stuck in this range until clear breakout signals appear on either side.
- The ECB increased interest rates by 50 basis points (bps) as anticipated on December 15, reiterating that more hikes will follow, and outlining plans for quantitative tightening.
“First, even the 10% across-the-board tariffs and the 25% sector tariffs on autos, steel and aluminum are a big step up from previously. Second, the success of negotiations is uncertain as the U.S. continues to have multiple competing objectives and EU concessions on non-tariff barriers are broker liteforex unlikely. Third, China is excluded from the pause and its tariff rate continues to escalate, creating drags on the euro area economy. Fourth, trade policy uncertainty remains elevated as the situation still feels volatile,” said Greg Fuzesi, euro area economist at J.P. The Australian and New Zealand dollars remain closely linked to global economic health.
This major currency pair is not only among the most traded in the Forex market but also serves as a barometer for global economic sentiment. Traders and investors worldwide look to predict the future price of EUR/USD, not merely to make successful trades, but also to gauge the relative strength of the European Union and the United States economies. The EUR/USD real-time chart provides an up-to-the-minute visual representation of the exchange rate between the euro and the U.S. dollar. This chart is a crucial tool for traders and analysts, allowing them to monitor price movements, identify trends, and make informed trading decisions based on live data.
The euro (EUR) has been one of the strongest performers this spring, rising 10% over the past two months. A major tailwind has come from the European Union’s announcement of a €500 billion defense spending package—equivalent to 3.8% of Eurozone GDP. This fiscal push, alongside improved manufacturing data and capital inflows from the U.S., has fueled optimism for the euro. CFTC data through May 6 showed net long positions holding steady at around 75.7K contracts—near multi-month highs—while open interest climbed to around 738K contracts, the highest level since September 2024.
In this comprehensive analysis, we will examine the technical aspects of the EUR/USD chart, consider historical cycles, analyze interactions with other markets, and evaluate fundamental influencing factors. The goal is to create a well-founded forecast for the medium to long-term development of the currency pair that provides valuable insights to both experienced and less experienced market participants. They note that strong U.S. labor market data and high inflation have reduced expectations of Fed rate cuts, strengthening the U.S. dollar. Meanwhile, the ECB is expected to cut rates faster than the Fed, potentially pushing the euro toward parity with the dollar. As part of the technical analysis for EURUSD in 2025, we will assess the placement of the nearest support and resistance levels, examine the formation of chart patterns, and analyze technical indicators.
- After the US Dollar, the Euro is the most traded currency globally and used a lot for international business.
- The US economy is expected to slow down in 2025 due to high borrowing costs, while in the eurozone a gradual easing of financial conditions is expected to support economic activity.
- This, in turn, will lead to higher oil prices and higher delivery costs, which will put additional pressure on global energy markets.
- In 2025, analytical euro-dollar exchange rate forecasts see the pair as reflecting the ongoing economic and monetary adjustments within the Eurozone and the United States.
- They note that strong U.S. labor market data and high inflation have reduced expectations of Fed rate cuts, strengthening the U.S. dollar.
- Despite a notable easing from the previous year, inflation rates are still above the Fed’s 2% target.
This scenario indicates a consolidation phase, where buyers and sellers compete for control over key levels. As a result, prices could remain stuck in this range until clear breakout signals appear on either side. The weakening of the euro against the US dollar may be linked to higher interest rates in the US, economic turmoil in the eurozone, increased demand for the greenback as a safe-haven asset, or negative tickmill review news. Long-term forecasts inherently involve greater uncertainty and are intended as reference points for strategic planning, such as investments or international finance decisions. Despite the eurozone’s mixed growth signals, the outlook for the euro is positive.
The daily chart provides a more granular look at the pair which tended to trade within a broad range for the majority of the year. Given the many moving parts surrounding the euro’s value, signals of an obvious directional move appear to be absent, apart from the negative divergence that has been playing out since the early June swing high. Perhaps the biggest story this quarter, however, is what a Donald Trump presidency would mean for Eur/Usd. It’s widely agreed upon that a Trump government will likely implement looser fiscal policy, a steeper US yield curve, and stronger currency. The foreign exchange aspect remains uncertain and has been further complicated in the beginning of the quarter by former President Trump’s remarks to Bloomberg, whereby he disparaged the weak Japanese yen and Chinese yuan. Over the next three months, the dollar is forecasted to ease, but the journey is likely to be choppy due to a robust inflation outlook from the Fed whereby it anticipates only reaching the 2% target in 2026.
Analyzing this pair requires a multifaceted approach, incorporating a fundamental focus on economic indicators, technical analysis to identify entry and exit points, and ongoing monitoring of market sentiment. Such a comprehensive approach makes the EURUSD pair a crucial barometer of global financial health. The rate between the Euro and the United States Dollar changes constantly due to various market forces. Track currency trends, analyze historical charts, and explore monthly and yearly predictions for smarter trading and financial planning. Conversely, the US economy shows more robust growth and persistent inflation, with a GDP growth rate slowing to 1.6% but still supported by strong consumer spending and labour market conditions.
So, if you look at the price chart, you will notice the price repeats its actions over the long term. For short-term trades, you should check fundamental factors that usually affect the EUR/USD rate. The more the economy heats, the more likely the central bank to phase out the quantitative easing program and hike the interest rates.
The Federal Reserve’s commitment, expressed by Chairman Jerome Powell, not to raise interest rates until the end of 2023, has further impacted the greenback. This typical formation can be a signal of a potential reversal of a market trend… Early in February, the price of the pair reached a high of $1.1495 before progressively declining to a low of $1.0380 on May 13 – a level last reached in January 2017. As of 15 July 2022, the pair has fallen over 12% year-to-date to trade around the 1.00 level. Overall, Goldman expects that the Euro will struggle during 2024 and forecasts EUR/USD will be held at 1.06 on a 6-month view.
These forecasts are based on the assessment of macroeconomic data, monetary policy, and market sentiment. Below are expert opinions from banks and financial companies regarding possible EURUSD movements in 2025. The USD/EUR exchange rate is set by continuous trading in the global foreign exchange (Forex) market. As global markets continue to react to geopolitical tensions, fiscal policy shifts, and evolving central bank decisions, May has brought a sharp pivot in sentiment across major currencies. The U.S. dollar (USD) remains under pressure, while fiscal stimulus in Europe and resilient domestic demand in select emerging markets are creating new dynamics in the global foreign exchange landscape. In the world of Forex trading, few currency pairs command as much attention as EUR/USD.