Euro to Dollar (EUR/USD) Forecast for 2023, 2024-2025 and Beyond

2023.02.13 2023.02.13
EUR/USD Forecast for 2023-2026 and Beyond

Jana Kanehttps://www.litefinance.org/blog/authors/jana-kane/

EUR/USD is one of the major currency pairs. It means that it’s one of the most traded pairs in Forex. However, traders around the globe try to predict its future price for more than opening successful trades. The direction of EUR/USD may reflect the strength of either the EU or US economy. Moreover, the EUR to US dollar rate may reflect the overall global market sentiment.  

As the pair is widely traded, it may be hard to forecast its rate for the long term. The Euro/US dollar rate is subject to such factors as interest rate differences, inflation, jobs data, trade, and capital flows. Simultaneously, a large part of the pricing is also related to ‘event’ risks that cannot be gauged in advance. Let’s go more in-depth in this Euro to Dollar forecast.

EUR/USD Current Rate

The current rate of the EUR/USD pair is $1.06790. Below, you can see an interactive chart from Forex in real-time:

Characteristic Features of the EUR/USD Pair

The EUR/USD pair belongs to the major currency pairs (majors) and is characterized by increased liquidity. This is not surprising, as it includes two of the world’s major reserve currencies: USD and EUR. It is in the euro/dollar that the largest volume of transactions is made during daily trading on the Forex market (approximately 20% of the total volume).

The behavior of the EUR/USD pair is a kind of indicator showing the comparative state of the US and EU economies. If the US economy is growing steadily, and problems arise in the EU, this might cause a EUR to US dollar fall. Conversely, if there is a decline in growth rates in the US and the Eurozone demonstrates good performance, the EUR/USD pair will grow. Let’s consider the main trading characteristics of this pair:

• Active trading hours – the pair is traded around the clock except for weekends. It is most active during the European and American trading sessions. At this time, the largest trading volumes take place, and the main movements of the EUR/USD pair take place.

• Volatility – the EUR/USD pair is characterized by medium volatility. During the release of important data, the pair is capable of making strong movements from 100 points and above. But in general, if you look at the historical data, the average daily volatility of the EUR/USD pair is about 80 pips.

• Spread is one of the main advantages of this pair. Due to the highest liquidity, the spread for the EUR/USD pair is minimal. On popular ECN accounts, the spread is usually less than 1 pip.

The Dollar in 2023: More Predictable?

Perhaps the direction of the dollar will become a little easier to predict under President Biden. First of all, financial markets are counting on the new US president to run less internationally and deal more diplomatically with trade disputes. This provides more peace and security in the financial markets, reducing the need for a haven such as the dollar.

Also, Biden is expected to spend (a lot) of money to continue to stimulate the US economy, including post-corona, which will further increase the US’s debt position. The fact that interest rates will remain low for a longer period also plays a role: at the most recent meeting of the Federal Reserve, Chairman Jerome Powell hinted that he would not have an interest rate hike until mid-2023.

All of this leads to an estimate that capital flows towards emerging markets and currencies will continue to flow at the US dollar expense. Countries such as Indonesia and Mexico have aggressively lowered their interest rates, but interest rates in these countries are still considerably higher than in the United States.

Besides, countries such as China, South Korea, and Taiwan have had the coronavirus outbreak reasonably under control for some time now. In combination with optimism about the arrival of COVID vaccines, this means that investors are, in any case, moving to more risky markets.

EURUSD Technical Analysis

To make up a realistic forecast for the EURUSD, it is necessary to conduct a deep technical analysis on different timeframes. Let’s start by studying the EURUSD monthly chart.

Until the summer of 2020, the euro price was moving within a multi-year downtrend. In July 2020, the blue trend line was broken upside at the level of $1.16. It is impossible to say with certainty about the reversal of the price movement or the imminent downtrend continuation due to the lack of appropriate signals.

In the near future, the market is likely to remain in a sideways trend. If significant fundamental factors do not affect the Euro exchange rate, then expect the trading in the range of 1.06-1.25 US dollars for the next year. The upper and lower borders of the trading channel are determined by local lows and highs that were formed at the peaks of trading activity in February 2018 and March 2020. These extremes are marked with blue marks on the chart.

EURUSD price prediction for next three months

Let’s continue a technical analysis on the weekly chart and use the MACD indicator to get additional signals.

As the chart shows, the indicator has been in a hidden bullish divergence towards price in recent months. MACD moving averages are below the price level. Therefore, we can conclude that the forecasted value shortly will not decline for long, if at all. The lower border of the channel at 1.06 USD serves as a support level.

Starting in April, expect a slow reversal of the price up. It will continue to move in this direction over the next three months. So far, there are no fundamental reasons for a serious strengthening of the Euro against the US Dollar. Most likely, growth will be limited by the upper border of the trading channel at 1.15 USD, which was formed in 2015 and 2016. The beginning of the upward movement will be confirmed by the crossing of the signal line by the MACD line from the bottom up.

What will be the price of euro in 2022?

To make a long-term forecast, let’s use Bollinger Bands on the chart to make up a price history analysis.

After analyzing the overall market’s potential and the dynamics of changes in Bollinger Bands depending on the market situation, we can conclude that over the next 12 months the EURUSD rate will be in the range of 1.06 – 1.15 USD. Growth towards the upper border of the channel is likely to be very volatile. Bullish impulses will be replaced by short-term corrections, after which the upward movement will continue.

Expect at least one strong correction in the summer and late fall of 2022. The potential target of the local bullish trend is the level of 1.15 USD, which serves as the upper border of the multi-year trading channel.

Monthly EURUSD price forecast for 2022/2023

Based on the forecast above, I made up the expected EURUSD trading ranges for each month of 2022/2023. The table below shows the projected market lows and highs for the designated period.

Long-term EURUSD trading plan

Given the EURUSD potential, expected highs, lows, and targets, it is possible to draw up a trading plan that will help you get profit with minimal risk.

Enter trades after the expected growth is visible on the price chart and confirmed by a distinct signal. This can be the intersection of the MACD lines on a weekly timeframe or the appearance of a reversal candlestick pattern. The approximate entry level is around 1.07 USD (marked with a blue line on the chart). 

Stop-loss should be placed below the border of the trading channel, that is the level of 1.06 USD (marked with a red line). Place take profit at the level of the upper border of the channel, around 1.15 USD (marked with a green line). This is an important psychological mark, which the future price is unlikely to overcome on the first try.

Follow personal risk management rules, take care of yourself and your money!

EURUSD technical analysis is presented by Mikhail Hypov.

Euro/dollar weekly price forecast as of 13.02.2023

The EURUSD price could break out the key support of the medium-term uptrend 1.0715 – 1.0683. If the price breaks out the support zone and consolidates below level 1.0683, the medium-term trend will turn down. In this case, the downside target will be Target Zone 2, 1.0609 – 1.0587. It will be relevant to sell on the corrections at strong resistance levels.

If the trend key support is held up and the price goes back to level 1.0715, it will be relevant to buy with a target at the February high. If the February high is broken through, the price will break out Target Zone 6, 1.1023 – 1.1002, and the next upside target will be Target Zone 7, 1.1235 – 1.1214.

EURUSD trading ideas for the week:

Buy according to the pattern at support (В) 1.0715 – 1.0683. TakeProfit: 1.1030. StopLoss: according to the pattern rules.

Technical analysis based on margin zones methodology is presented by an independent analyst, Alex Rodionov.

Read on to find out the EUR/USD forecast for the upcoming years!

Analytical Agencies’ EUR/USD Forecast for the Rest of 2022

EUR/USD has lost a lot from the beginning of the year to the beginning of March. Will the pair have a chance to recover?

Trading Economics

According to global macro models and the expectations of analysts’ from Trading Economics, the pair may trade at 1.09 by the end of March. By July, the Euro/US dollar rate may fall to 1.08. By the end of the year, the price may decline to 1.07. The downtrend seems insignificant. However, if you compare the future rate to the previous one, you will see that the pair has been weakening. 

Long Forecast

Below is a EUR/USD prediction chart for 2022. The Economy Forecast Agency is more pessimistic than Trading Economics. The price will fall below $1 by the end of the year. The price record of $1.12 will be recorded in March, while the lowest price will be hit in November. It’s worth knowing that the pair will mostly trade at lows last seen in 2002. 

PandaForecast.com

PandaForecast.com is quite optimistic about the pair’s future. By the end of the year, the price will be able to reach the highs recorded in January and February 2022.

EUR/USD Forecast for 2023

2023 projections vary. One source expects the pair to trade at the lows of 2002, while another one sees the pair at the highs of 2014. Have a look. 

Long Forecast

In 2023, the overall market trend is expected to be bullish. Still, the pair won’t be able to reach the highs of previous years. The pair will be still at the lows of 2002. 

PandaForecast.com

PandaForecast.com predicts a solid uptrend that will lead the EUR/USD price to the highs of 2014. The volatility degree won’t exceed average levels.  

EUR/USD Forecast for 2024

In 2024, the EUR/USD pair won’t hit new maximums. Still, it may trade at good levels. 

Long Forecast

In 2024, EUR/USD may finally break above $1. Nevertheless, the source doesn’t give chances to the pair again. By the end of the year, the euro will trade below $1 against the US dollar. The maximum rate will be set in September when the pair is expected to touch $1.04.  

PandaForecast.com

PandaForecast.com expects the pair to rise until September. After that, trades may see a downtrend. Still, the prediction is optimistic. The average price in December 2024 is anticipated to be $1.2896.

Long-Term Euro to USD Forecast 2025-2026

Any long-term forecast is not reliable. Market conditions change daily. Thus, a long-term prediction for the EUR/USD pair should be taken with a grain of salt. You won’t find a EUR/USD projection for  2025-2030. However, we found some data for 2025 and the beginning of 2026. 

Long Forecast

The Economy Forecast Agency is still negative about the bright future of the EUR/USD pair. The rate will barely close above $1 in 2025. In 2026, the pair won’t rise above $1 at all. 

PandaForecast.com

The source sees a continuation of the bullish trend in 2025. Although the uptrend will be replaced with a downtrend, the pair may hit the highs of 2011.  

Which Factors Affect the Quotes of the EUR/USD Currency Pair?

The EUR/USD rate is the ratio of the currencies of the two largest economies in the world – the EU and the USA. Therefore, important economic and political news from the EU and the US directly affects the euro-dollar rate. These factors of influence are called fundamental; in addition to them, there are also technical ones. Let’s consider both those and others in more detail:

Fundamental Factors

There are several important economic indicators for the US and EU. The most significant factors affecting the course of the pair include the following:

• Change in interest rates of the ECB and the Fed

• Unemployment Rate

• Data on jobs created in the US (Nonfarm Payrolls)

• Growth rate of GDP

• Inflation indices (CPI, PPI)

• Industrial production (Industrial Production index)

• Retail Sales

• Trade balance

• Consumer Confidence Index

• Indices of business sentiment (ISM, IFO)

• Speeches by top officials – press conferences of the heads of the ECB and the Fed, speeches, and comments by leading politicians from the EU and the United States.

• Political events – various reshuffles in the government, elections, popular unrest, internal political instability (e.g., Brexit)

• Force majeure – extraordinary events, natural disasters, man-made disasters, terrorist attacks, epidemics

Technical Factors

• Active trend – an essential technical factor for trading is the presence of an active trend. In an uptrend, purchases are preferable; in a downtrend, sales are recommended, in a sideways trend (range), trading in both directions from the boundaries of the price range is appropriate.
• Important support and resistance levels are historical highs and lows on the price chart. These are important price reference points for analyzing and predicting the future movement of the pair.
• Price patterns – various patterns of continuation or reversal of a trend from classical technical analysis, candlestick patterns, and Price Action patterns.

History of the EUR/USD Pair

The Euro (EUR) is a fairly young currency that was born in 1999. The single European currency has replaced a whole galaxy of the EU countries’ national currencies: The Deutsche mark, the French franc, the Italian lira, and others. Therefore, one of the euro’s features is its susceptibility to macroeconomic statistics of the entire Eurozone and individual EU countries’ indicators.

The European currency was officially introduced into non-cash circulation on January 1, 1999, and on January 1, 2002, banknotes and coins were introduced into cash circulation. In terms of the volume of use in international payments, the euro is second only to the US dollar. It is also the second most popular (after USD) reserve world currency. At the time of the official start of trading, the EUR/USD rate was in the 1.1800 area.

Since the beginning of trading in 1999, the EUR/USD pair has undergone significant changes. In the first two years, the euro’s prospects were still vague, and the quotation was declining, reaching a minimum of around 0.8200. The pair then rallied for seven years, reaching an all-time high of 1.6039 in 2008. In subsequent years, due to the banking crisis’s influence and various problems in the Eurozone, the pair corrected significantly.

The pair was in a dramatic bearish trend until April 2015. After that, the pair started recovering. The Covid-19 breakout pushed the price up. 

In terms of market sentiment, 2020 was a very illustrative year. During the first coronavirus wave in March, the market was unpleasantly surprised by the severity, magnitude, and impact of the coronavirus pandemic, causing investors to flee to the dollar as a safe haven.

Initially, the coronavirus was thought to be “a Chinese problem only.” Still, as the virus began to spread faster worldwide – locking up economies around the world – the dollar exchange rate was recalibrated in no time. 

A similar revision took place three months ago but in the opposite direction. When pharmaceutical company Pfizer released positive vaccine news in early November, the dollar fell in value due to the disappearance of the need for a safe haven. 

In both cases, the market reaction was apparent, but that is not always the case. Take the announced financial support packages from the European Central Bank (ECB) this year. Whereas in the past, the availability of more euros often caused downward pressure on the euro, such packages resulted in an upward price movement this year.

Coronavirus support was “suddenly” perceived as positive by the market. According to investors, the ECB showed it was doing everything it could to prevent companies from collapsing and safeguard employees’ jobs.

Precisely because of the occurrence of unforeseen market conditions and the sometimes-surprising market reaction to them, our starting point is that you should always take price estimates with a grain.

For example, at the end of 2018, many market parties anticipated a weaker dollar, but in 2019 the dollar picked up with the US-Chinese trade war as a catalyst. That created a lot of uncertainty, causing capital to flow to safe havens like the dollar. Such events are difficult to envision, and this was especially true in recent years with a fickle character like Donald Trump at the helm in the United States.

The pair was quite strong until April 2021. However, a new downtrend took place after. If you check the historical price actions, you will notice that the pair simply follows traditional trends.  

To check how has the rate of EUR/USD changed over time, please follow this link to the extended historical price chart. 

Is EUR/USD Still a Good Investment?

Due to its enormous liquidity, projection, availability, and low spread, the EUR/USD currency pair enjoys well-deserved popularity among traders. As of March 2022, the pair follows its traditional downtrend. Thus, some sources predict the pair’s fall in 2022. Below is a EUR/USD prediction chart for 2022: 

Source: Longforecast.com 

But what does the EUR/USD forecast predict for the distant future? It’s important to remember that any long-term forecasts, even the EUR/USD forecast, or any other currency pair, are too unreliable to believe in. Too many factors may affect the rate of the currency pair, and it’s best to be up-to-date with what’s happening in the global arena in order to make realistic and reliable predictions.

If you do decide that trading this currency pair is something for you, and you believe in the future of the Euro vs. US Dollar pair, first, you need to decide on a suitable trading method for you and work it out first on a demo account, and then on a real account. A great reason to create a free demo account on LiteFinance! LiteFinance has fact-checked information and a user-friendly platform with an outlook for novices as well as experienced traders and investors.

By the time of transactions, you can trade as follows:

• Intraday – trading without carrying over the position to the next day. It is characterized by narrow stop-loss and take-profit orders, requiring a trader to spend a lot of time in front of a monitor and strict discipline, and is available even with a small deposit.

• Medium-term – the duration of transactions from several hours to two-three days. The medium-term trading implies wider stop-loss and take-profit orders, takes less time, and requires a more substantial trading account size.

• Long-term – trades are held for several weeks or even for months. This trading style is more suitable for investors. 

Disclaimer: The information in this statement is not intended as individual investment advice and should therefore be seen as an investment recommendation. This recommendation has been drawn up by LiteFinance and/or third parties and does not match your personal financial situation, your knowledge and experience, your investment objective and/or horizon, and your risk profile and/or tolerance. You are therefore responsible for correctly assessing whether this investment is suitable for you in relation to your financial situation and your investment objectives.

Price chart of EURUSD in real time mode