EUR/USD pair forecast
It is commonly known that for the best trades to happen, one needs to anticipate the trends and know what is happening in the markets. Just like everything else, the specific pairs in the markets have factors that affect them.
That’s why you need to know the specific factors to keep an eye on and ensure that your results are accurate.
The forecast for the EUR/USD pair is done by looking, not just at the economies of both countries or what the EUR/USD news says, but other important information too.
In this segment, we’ll tell you what the professionals look at when determining their EUR/USD forecast. That way, you will have a stepping stone that allows you to know where to get started.
If you take this information, our EUR/USD pair forecasts, and the forex signals that we provide, you will be well on your way to get the best trades.
The History of the Euro to Dollar Rates
When we are doing analysis, we do not just walk in blindly. The pros will tell you to rely on historical data to see what it can reveal about the trades that you would like to make. So, what does the past have in store for us?
Between 2008 and 2018, we have ten years’ worth of history that tells us that the EUR/USD pair’s exchange rate ranged between 1.039 and 1.598. The range shows an exchange rate with an almost perfect parity at a ration that is almost 1:1.
The kind of historical data that exists about this specific pair is what fundamental analysts use.
The Factors Affecting The USD to Euro Exchange Rate
The US and Europe GDP Growth RateThe GDP of a country measure the monetary value of the local currency, all economic goods, and services a country produces in a specified period. Most governments make economic decisions based on GDP numbers because they affect many people in any given economy.
It is used as an economic indicator and with each decision made that comes from the GDP, the exchange rate may shift. We look out for announcements about the GDP to stay ahead of the EUR/USD news for accurate forecasts.
- The Fed/European Central Bank
The Fed controls the interest rates in the US whole the European Central Bank does the same in Europe. When they raise their currencies’ interest rates, there is usually a weakening of exchange rates in other countries.
Their decisions can affect the exchange rates directly. That is why these decisions are something that one needs to keep in mind when trading this pair. They can change drastically with every announcement The Fed or ECB makes.
- Money Supply Set by The Fed or the European Central Bank
When everything stays constant or equal, a larger supply of money will bring down the market interest rates, making it less costly to borrow money for consumers. Smaller supplies of money raise the interest rates for consumers looking to take out a loan.
If there is a permanent increase in the money supply, the long-term effect is that it will depreciate.
- Unemployment Rates
Unemployment is combated by lowering the federal funds rate and expanding the monetary policy to stimulate the economy and create jobs. If the rate is lower than expected, inflation pressure can be felt and cause a rise in interest rates. Whatever the numbers are, there is always a need to keep an eye out for the EUR/USD news concerning unemployment from both the US and Europe side.
- Trade Agreements and other costs of trading internationally
Economics dictates that when demand is high, prices rise, and a currency’s value rises with them. If a country import’s more than it exports, there is less demand for their currency, meaning that the prices decline. By looking at the numbers of both the US and Europe side, one can know when the currency rates will shift.
- Debt Levels
When it comes to debt, the logic cuts both ways. If the debt is high, the forecast will show that the currency value is limited. If a country has low debt levels, the value of its currency will most likely go up. When the announcements of national debt from Europe or the US are announced, traders have to consider this to ensure that they can survive the economic impact of the debt levels and how they change from time to time.
- Economic Growth
Economic growth and strength are usually tied to a strong exchange rate. It can even be so powerful as to be a symbol of national pride, as evidenced by the US. That is why you will see fluctuations in the market if a politician so much as mentions anything about the strengthening or weakening of a country’s currency. The announcements made by official agencies in the US and Europe can affect how the market reacts to the pair and causes changes.
You can make a forecast by looking at the EUR/USD news for any mention of economic strength and news about both economies’ economic states.