EUR/USD: Is It Worth Investing Now? Read the Full Analysis

The EUR/USD pair remains one of the most liquid and actively traded assets in global currency markets. Currently trading at 1.17187 (down 0.22%), understanding the drivers behind this instrument’s movement is essential for those looking to profit from currency operations. In this material, we will delve into the euro’s forecast against the dollar, exploring technical and economic scenarios to help you make smarter decisions.

What’s happening with EUR/USD now?

In recent months, the behavior of the EUR/USD pair reflects a series of economic and political uncertainties affecting both sides of the Atlantic. Throughout 2023, the asset traded within narrow ranges, with little significant movement. But in 2024, the scenario has changed: volatility has increased considerably.

Forecasts for 2024 indicate a trajectory that could range between 1.128 on the high and 1.094 on the low, representing a significant change from June levels (1.0743). This range suggests there will be no shortage of opportunities for attentive traders.

The numbers speak: What do technical indicators reveal

When it comes to forecasting the euro against the US dollar, charts tend to be quite eloquent. Let’s look at the details:

Moving Averages (MA): Except for the 100-day indicator, nearly all signals point to selling pressure. This suggests short- and medium-term downward momentum.

RSI (Relative Strength Index): The indicator is around 45, indicating a neutral territory. There are no strong signs of oversold or overbought conditions at the moment.

MACD: The history shows this indicator operating in negative territory, reinforcing the outlook for continued downward movement for the pair.

Therefore, the technical reading points to a cautious scenario, with a moderate downward trend in the coming quarters.

The behind-the-scenes: Economic factors moving the pair

Beyond charts, it is crucial to understand what is happening in central banks and the real economies of each bloc.

In ECB decisions (European Central Bank): The institution signals a possible aggressive stance on interest rate cuts during 2024, aiming to revive growth in the eurozone. Lower interest rates tend to weaken the currency.

On the Federal Reserve side: The US central bank maintains a firmer stance, with the intention of supporting or even raising rates to control domestic inflation. This makes the dollar more attractive to investors, especially considering the rising yields on US Treasury bonds.

Economic data in focus: Metrics such as GDP, unemployment, and price indices (CPI) are crucial. A stronger GDP in the eurozone can support the euro, just as robust employment data in the US tends to strengthen the dollar.

This tug-of-war between the two economies keeps the EUR/USD pair in a volatile dynamic, creating both challenges and opportunities.

Why trade EUR/USD? Know the advantages

There are concrete reasons why this pair attracts so much attention:

• Unparalleled liquidity: It is the most traded pair globally, meaning reduced spreads and almost instant execution
• Robust regulation: Both markets (European and American) have solid regulatory frameworks
• Lower margin compared to other assets: Trading forex allows leverage and lower operational costs compared to stocks or futures
• Real diversification: Adding EUR/USD exposure to a portfolio offers protection against specific currency risks
• Various strategies: The asset’s volatility opens doors for short-term trading, arbitrage, and hedging

How to trade EUR/USD intelligently

Betting on the euro without a methodology is a recipe for frustration. Here are practical steps:

1. Combine analyses: Don’t rely solely on charts. Follow central bank meetings, macroeconomic data, and geopolitical news.

2. Always manage risk: Use stop-loss orders to set loss limits on positions, protecting your capital against unexpected moves.

3. Don’t put all your eggs in one basket: Diversify among other currency pairs and asset classes to reduce concentrated exposure.

4. Study before acting: The forex market has its peculiarities. Dedicate time to understanding mechanics, economic events, and historical cycles.

The euro forecast: Profitable but requires caution

The euro versus dollar forecast is not an exact science but a combination of rigorous analysis and risk management. With the right tools, updated information, and disciplined execution, trading EUR/USD can yield consistent results.

The key is to stay informed about global economic and political changes, monitor key events impacting rates and capital flows, and use technical and fundamental analyses complementarily. Remember: every trade involves risk, and a well-diversified portfolio is your best shield against adverse volatility.