EUR/USD fell sharply during Q3, on USD strength and a deteriorating economic outlook for the eurozone region. Could this diverging outlook between the FED and the ECB keep the pair trending lower across Q4 and the beginning of 2024? Here you can find the most recent EurUsd forecast and price predictions by market experts.
EUR/USD has fallen over 6% from its peak in mid-July, dropping to 2023 lows around 1.05, after 11 consecutive bearish weeks.
While the Federal Reserve sees another rate hike this quarter & less easing next year as the US economy is showing resilience & oil prices are high, a worsening economic outlook in the eurozone region, which, combined with cooling inflation, has fuelled bets that the ECB is at the end of its rate-hiking cycle.
This monetary policy divergence has influenced the interest rate differential expectations between the two currencies in favor of the US Dollar. The central bank's dovish rhetoric indicated to markets that it had reached its terminal interest rate, which has seen the EUR become one of the preferred funders for carry trades (owning high-yielding versus low-yielding currencies).
The latest institutional Euro to Dollar forecasts are revised lower with parity on the cards if oil prices keep going up during Q4.
Key Euro to Dollar (Eur/Usd) Forecast & Price Predictions
- Euro to Dollar forecast Q4 2023: Institutions agree that short-term dollar strength will dominate. However, diving into their projections, a forecasted Euro to Dollar rate of 1.06-1.07 by the end of 2023 reflects a moderately bullish outlook for Q4.
- Euro to Dollar forecast 2024: While some banks see a softer Euro through early 2024, targeting a low for EUR/USD around 1.0200, advancing into mid-2024, the forecasts see EUR/USD rising to 1.10 and trading up to 1.15 be the end of 2024.
- EurUsd price prediction for the next 5 years: the pair is undervalued in real terms according to ING and based on the interest rate projections, EurUsd should trade above 1.20 in the next years.
With CAPEX.com you can trade Eur/Usd with tight spreads using our award-winning trading platform and mobile apps.
Euro to Dollar (EurUsd) Fundamental Forecast – Diverging outlooks for the Fed and the ECB
The US dollar has surged on US economic exceptionalism so far this year, while economies in the Eurozone have underperformed. The Fed is either done or nearly done raising interest rates, but the full impact of rate hikes on the financial sector may still be coming in Q4. ECB seems at the end of the hiking road and could look to start cutting interest rates, exerting more pressure on the EUR.
US Dollar Forecast: Strength Unlikely to Fade Yet
The great question surrounding the US economy going into 2023 was whether it would undergo a "soft landing" or a "hard landing" because of all the monetary and fiscal tightening over the preceding 18 months. Considering recent solid US data, the market now appears to have estimated that even a soft-landing scenario may be overly pessimistic. This is three-quarters of the way through the year.
Experts are hesitant to declare the US economy "all clear" as we approach the end of 2023 because monetary policy has "long and variable" lags and there is still a chance of a government shutdown in November, but it is undeniable that the US economy is outpacing its major competitors.
Composite PMI readings in the US have turned definitively higher, while readings on the European economy have rolled over.
The Federal Reserve appears to have dispelled concerns about an impending steep downturn by leaving a potential interest rate hike by the new year on the table and clearing two of its predicted rate cuts from the 2024 "dot plot."
While central bankers continue to engage in quantitative tightening at a rate of around $120 billion per month, it is the financial sector that will be the main flashpoint to watch in the fourth quarter. Deposits are leaving the banking industry at an unprecedented rate, and many tiny regional banks are dealing with substantial unrealized losses following the quickest increase in interest rates in decades.
Euro Forecast: ECB at the end of the hiking road
The ECB suggested that this was the final rate hike cycle when it increased interest rates for a record-breaking tenth consecutive meeting to 4%. The Governing Council's confidence that no further tightening is necessary should have grown because of the September inflation data showing a larger-than-expected decline.
Christine Lagarde has cautioned that rates may remain high for longer to contain inflation rather than strengthen the euro, but expectations that rates will remain high for longer might drive a deeper selloff due to worries about the potential effects on the eurozone economy.
Given that the eurozone economy is already showing evidence of weakness and that there is a delay between interest rate increases and their effects on the real economy, a recession or at the very least a protracted slowdown in growth is likely in the coming quarter. The ECB's potential interest rate cuts, which would put extra pressure on the EUR, will undoubtedly draw the market's attention.
Should data indicate that the eurozone economy is bottoming out, the outlook for the EUR may become a little bit more optimistic. However, the EUR/USD may find it difficult to achieve significant gains given that the ECB is anticipated to begin reducing rates before the Fed does in 2019.
Key developments to watch in Q4:
- Analysts forecast that the Fed will NOT hike interest rates again this year, but it’s certainly still possible if inflation or jobs data comes in elevated relative to expectations.
- Concerns over the health of the banking sector play a role in the above, with tighter credit taking a toll on growth more broadly.
- The ECB has likely ended its rate hiking cycle, and the economic outlook is weak for the region. Attention could start to turn to when the ECB will pivot, keeping pressure on the EUR.
EurUsd Forecast – Technical Analysis
The EUR/USD pair is bearish, although the charts show buyers have defended the 1.0900 threshold since late July. Somehow, it seems that the US Dollar is a bit exhausted, although, with the pair trading at current levels, a tide change is still unclear.
With inflation in the US and Europe broadly moving in the right direction and both regions’ central banks at and very close to reaching terminal rates, there are fewer obvious drivers for either currency which makes the EurUsd forecast and price predictions more difficult.
EurUsd Analysis – Weekly & Daily Charts
The weekly chart below shows that following a period of 11 consecutive candles (weeks) of negative closing during Q3, the pair have descended towards the 1.0500-1.0600 threshold. This critical support zone is defined by the March 2020 lows and aligns with the 38.2% Fibonacci retracement of the advance from September 2022 to July 2023, so it has strong significance from a technical perspective.
Although this key support area has managed to hold through the end of the third quarter, it remains at risk of giving way as the bears appear to be in control of the market. In the event of a breakdown, all bets are off.
EUR/USD broke below 1.0630, the May low, and fell to support at 1.0450, which is the level bears need to take out to bring 1.0350, the May and June low from 2022 into play. Beyond here 1.0220-1.0190 could become a target ahead of parity, the 61.8% retracement of the move discussed before.
On the flip side, if sentiment improves and turns in favor of buyers, a rebound could gain some momentum.
Buyers could be encouraged by the RSI bullish divergence and would need to retake 1.0630 to negate the near-term negative bias and rise above the 200 SMA at 1.0830 and the psychological 1.0900 mark for a recovery in the pair.
The daily charts highlight the descending channel built during the Q3 and the short-term key resistance level at 1.0630 which can change the market sentiment for the next weeks in case of a breakout.
While taking out this barrier could prove challenging for the bulls, a successful breakout could reinforce upward movements, paving the way for a rally toward the 2023 high located around 1.1275.
EurUsd Forecast – Sentiment Analysis
Bulls are expected to struggle to take control, according to the FXStreet Forecast Poll. Throughout the whole study period, buyers of EUR/USD have dominated, and bearish interest has dramatically declined. Nonetheless, the pair is typically observed at 1.0600 in the weekly and monthly views and up to 1.0792 in the quarterly one.
The near-term moving average has gone north on the Overview chart, but the longer ones have somewhat lost their negative strength. In the wider view, the spread of possible targets expands, with most bets in the 1.0600/1.0900 range. In the monthly perspective, most probable targets accumulate in the 1.0400/1.0700 area.
How do analysts see the market moving in the coming months and years? Below, we look at some of the latest projections.
Euro to Dollar Price Prediction Q4 2023 & 2024: EurUsd at Critical Juncture
Here we look at the Euro to Dollar (EUR/USD) forecast for Q4 2023 and 2024, including comments from highly-rated FX strategists.
Euro To Dollar Forecast End-2023: Lowered To 1.07 At BNP Paribas
BNP Paribas said that EURUSD has underperformed their expectations over the past month following the ECB's September meeting, in its October edition of Markets 360. Additionally, stated that "The current account has normalized and is now in a comfortable surplus – implying that the EUR will be more resilient as global growth slows – and portfolio flows show that this surplus is not being recycled abroad, as has typically been the case in the past."
The bank, however, warned that there were risks of higher energy prices on Europe's single currency in the near term as energy shocks induced by supply constraints will lead to weaker terms of trade, weighing on the Euro.
The French bank revised its year-end EURUSD forecast to 1.07 (from 1.10 previously).
However, BNP Paribas mentioned that the prospect of the eventual narrowing in the USD-EUR rate differential and structural arguments keep the bank confident in their medium-term expectation of a rise in the EUR, and they keep their initial EURUSD forecast for the end of 2024 at 1.15.
Euro To Dollar Outlook: 1.09 At June 2024 (CIBC)
Foreign exchange analysts at CIBC expect that the Euro to Dollar (EUR/USD) exchange rate will weaken to 1.03 at the end of 2023 on dollar strength before a rebound to 1.09 in June 2024 as the Fed cuts interest rates.
RBC Capital Markets Euro to Dollar Forecast for the next 12 months is bearish
RBC Capital Markets (RBC) forecasts EUR/USD at 1.04 at the end of 2023. RBC, however, expects a further net retreat to 1.02 in June 2024, stating that Fed policymakers are wary of a reacceleration in price growth with the economy still running exceptionally hot. The September data follows a string of downside surprises that left a substantially softer-than-expected broader price growth backdrop over the summer - and the upside surprise in the latest month shouldn't be enough to change that broader narrative.”
It added; “We don't expect additional interest rate hikes this year will be necessary, but the Fed is still willing to respond with higher interest rates were the inflation backdrop to show further signs of reacceleration."
Euro To Dollar Forecast October 2023: 1% Undervalued (ING Strategists)
Foreign exchange analysts at ING Bank suggest the Euro to Dollar exchange rate's fair value should be 1% higher than current levels at 1.0650, meaning that the pair is around 1% undervalued to its market drivers, below its 1.5 standard deviation and does not suggest an imminent upward correction. EUR/USD can slip back below 1.0500, forecasted by the Dutch Bank.
ING expects a reversal but has tempered its optimism. According to the bank, EUR/USD could be trading at 1.06 at the end of the year while it has downgraded the 2024 Euro to Dollar forecast to a peak of 1.15 from 1.18.
Euro To Dollar Forecast: "Difficult for Euro to Avoid Parity" If Oil Hits $110 (Nomura)
Foreign exchange strategists at Nomura forecast the Euro to Dollar exchange rate will weaken to 1.02 at the end of 2023, and should oil prices hit $110, parity could be on the cards.
Commerzbank Currency Predictions 2023-2024: The risks should continue to point downwards
The German bank forecast the Euro to Dollar exchange rate (EUR/USD) is tipped to see a sharp climb to 1.14 in Q4 2023. Subsequently, it inches upwards to 1.15 in Q1 2024, maintaining this rate into Q2, and then dips slightly back to 1.14 in Q3 2024.
Monetary policy considerations for the FED and ECB are likely to be of secondary importance for now, according to the bank. The risks in EUR/USD should continue to point downwards if the Middle East conflict were to increase in strength or escalate.
EUR/USD Price Prediction: US Dollar Tipped To "Lose Momentum" As Euro Moves To 1.05 Say MUFG
MUFG forecast the US Dollar to lose upward momentum as EUR/USD moves closer to the bottom of the 1.0500 to 1.1000 trading range. Barring unexpected shocks to the euro-zone economy, a breakout from this trading constraint is deemed unlikely, according to the bank.
Absent another negative shock for the euro-zone economy such as the price of oil surging back above USD100/barrel, MUFG forecasts the EurUsd pair to find it harder to break out below the bottom of the 1.0500 to 1.1000 trading range in the month ahead.
Euro To Dollar Outlook: 1.02 Lows In Three Months (Rabobank)
Currency strategists at Rabobank have recently downgraded its Euro (EUR) forecast against the US Dollar (USD) and now expect a low of 1.02 in the next three months. Having breached their former 1.06 target, the bank has revised their Euro to Dollar forecasts lower and now expects the pair to move to 1.02 on a 3-month view and remain lower for longer into 2024.
Euro to Dollar Price Prediction Q4 2023: Eur/Usd is oversold say Scotiabank
According to Scotiabank chief currency strategist Shaun Osborne; "A high close on the week suggests the USD may push on a bit more to retest – at least – its recent peaks."
Investment banks overall remain very cautious over the Euro outlook, but Scotiabank considers that EUR/USD is still oversold and noted; “Gains might extend to 1.0675/1.0725.”
Wells Fargo forecasts a softer Euro during Q1 2024
Wells Fargo takes a negative stance on the European outlook, considering that sentiment surveys for both economies have softened sharply in recent months, and European underperformance relative to the US should weigh on both currencies.
The European Central Bank and Bank of England have also signaled that policy rates have likely reached their peak, thus lessening interest rate support for their respective currencies, commented the US bank.
The bank forecast a softer Euro through early 2024, and a EUR/USD price prediction around 1.0200.
Euro to Dollar forecasted to trade above 0.95 in 2024 (ANZ)
ANZ expects further trouble for the Euro given the increase in energy prices.
According to the bank, rising commodity prices if sustained will add another blow to the EA’s economy. As net importers of energy, higher energy prices will impact the EA’s balance of payments negatively. While they think this will add to downside pressure on the EUR, ANZ forecast is unlikely for EUR/USD to test last year’s low of 0.95, as local storage facilities are better stocked for Europe’s coming winter.
Euro To Dollar Outlook: Heading Towards Parity (SocGen)
According to investment bank SocGen, the fundamentals are supporting the dollar; The Treasury is selling bonds, yields are rising, and money is being sucked into the USD, comfortably financing the current account deficit – a fiscal/monetary policy mix that is designed to help the Dollar overshoot to the upside and there’s further to go.
SocGen considers that the US Dollar will maintain its market dominance in the short-term outlook, and forecasts EUR/USD heading toward parity.
Other Euro to Dollar price predictions for 2024
Amundi Asset Management still forecasts EUR/USD gains to 1.18 for mid-2024.
Danske Bank forecasts that EUR/USD will be resilient in the short term, but continue to expect an underlying grind lower with the pair at 1.03 in 12 months.
EurUsd price predictions based on AI
Here are the December 2023 EurUsd price predictions from the most popular AI-based sources.
Algorithm-based website Wallet Investor’s EUR/USD forecast the pair to close 2013 slightly above 1.04.
In a longer-term projection, Wallet Investor’s EUR/USD forecast for 2024 had the pair potentially reaching a high of 1.04 and close the year at slightly above parity.
The EurUsd forecast for the next 5 years is to trade below parity at 0.87, according to this algorithm website.
As of June 2023, the service’s EUR/USD forecast for 2023 expected the pair to close the year at 1.047 with a 1.074 high.
Long Forecast’s EUR/USD price prediction for 2024 had the pair potentially reaching a maximum price of 1.147 and closing it at 1,10.
The EurUsd forecast for the next 5 years is to trade around parity according to this algorithm website.
The EUR/USD is expected to trade at 1.04 by the end of this quarter, according to Trading Economics global macro models and analysts' expectations. Looking forward, the agency’s EUR/USD forecast for the next 12 months is 0.99.
The EUR/USD price prediction for Q4 2023 from AI Pickup is neutral – the website saw the pair averaging a rate of 1.06. The following years, however, could see a rise to an average of 1.15, a 6% increase. The platform’s EUR/USD forecast for 2030 saw the pair trading at parity.
What Drives the Euro / US Dollar Currency Pair
The EUR/USD trend depends on what stage of the cycle the global economy is at. During a recession, the demand for safe-haven assets, including the US dollar, increases. As a result, the eurodollar goes down.
During a recovery from a recession, investors are not that focused on preserving money. Retail investors search for ways to multiply the deposit. At this stage, the fundamentals driving the EUR/USD currency pair are the GDP growth rates and the monetary policy of central banks.
A strong economy is a strong currency. The rapid rebound of GDP after the recession is a reason to buy securities of the country. In particular, the belief that the US economy will fully recover from the 2020 recession in the second quarter of 2021 and exceed its potential level in 2022 contributed to the S&P 500 rally by 18% from January to early August. As a result of the capital inflow into the US stock market, the US dollar was strengthened.
The GDP rate is a reliable indicator but, unfortunately, lagging. The GDP report is published a month or month and a half after the end of the quarter. Therefore, it is very difficult to determine whose economy is growing faster at a particular time, which doesn’t provide a clear picture of the current economic situation to investors. That is why forex traders have to monitor some leading macroeconomic indicators, such as the US and Eurozone PMIs.
The more the economy heats, the more likely the central bank to phase out the quantitative easing program and hike the interest rates. As a result, the assets denominated in the local currency grow more attractively. That is why the US dollar is currently strengthening against a basket of major currencies.
To understand the Fed’s intentions, one should track such indicators as inflation and unemployment rate. When these indicators reach the thresholds set by the Fed, the central bank starts scaling back monetary stimulus. In this case, the greenback will grow in value.
Speeches of central bank representatives are important in forecasting the EUR/USD exchange rate. The officials’ comments give a clue on how the central banks’ policies could change, and investors could develop trading strategies based on this.
EUR/USD Trading Tips
- A necessary condition to look for buy opportunities in the long term is the sync trends in the global economy. If the US GDP features robust growth, but China and the euro area face problems, look for sell opportunities.
- Monitor the global financial markets. If the S&P 500 and oil are rallying up simultaneously, it is a reason to buy the Euro versus US Dollar. If the stock index is growing and the black stuff is falling in value, or both financial assets are depreciating, it is relevant to sell the EURUSD.
- Study the history of the financial asset’s quotes. An example that took place in the past may emerge in the future as a potential EUR/USD price movement.
- Use technical indicators in trading the EUR/USD to determine the current market state and key support/resistance levels. If the Moving Averages often cross the EURUSD chart, the market is trading flat. If the price chart is above the EMA, the trend is bullish; if the price is below the indicator, the underlying trend is bearish.
- Use Japanese chart patterns and western chart patterns like head and shoulders, double top and bottom, or triangles to identify entry and exit points.
- Do not try to use all popular trading strategies; you’d better find the one that suits you best.
- Always observe the rules of your online trading system.
EUR/USD price history
The EURUSD features quite high volatility. In the beginning, the EUR/USD currency pair was trading below parity. However, starting from 2002, the euro has never been below $1. The euro-dollar all-time low is 0.82; the record high is close to 1.604.
In 2020, the global economy faced a recession, which lasted for only two months. Because of the panic in financial markets, the demand for greenback sharply increased. As a result, the EURUSD dropped to a level of 1.064, the lowest since April 2017.
Central banks launched colossal monetary incentives of trillions of dollars to support their economies. The Fed was even called crazy because of a sharp federal funds rate cut from 1.75% to 0 and the start of the Quantitative Easing at a monthly pace of $120 billion. The Federal Reserve balance sheet was growing rapidly, approaching $9 trillion, and the US dollar weakened against a basket of major currencies. In particular, the euro, from January to March, was almost 16% up and reached $1.234.
In late 2020, the euro was expected to be trading up. Many banks suggested the EURUSD should have exceeded 1.25 in 2021. Some aggressive bulls expected the euro around $1.3. In reality, things turned out to be different. Due to the slow vaccination in the EU, which turned into new lockdowns and a double recession, the euro collapsed to 1.1705.
Thanks to vaccines, investors became reassured in the global economic recovery. Furthermore, the EURUSD buyers were again encouraged to invest in Euro Dollar by a successful vaccination campaign in the EU and the Fed’s unwillingness to recognize a surge in US inflation. The pair was up to 1.226 in late May. Bulls again were aiming at 1.25, but the FOMC June projection broke the uptrend again. The Fed started talking about a potential federal funds rate hike in 2022, which encouraged investors to buy the US dollar.
After falling from 1.2275 at the start of 2021, EUR/USD started 2022 at 1.1375. The price rose to a high of 1.1495 in early February before steadily dropping to a low of 1.0380 on May 13 – a level last seen in January 2017.
From that low point, the share price rose to 1.0790 at the start of June before taking another leg lower to 1.04.
The pair briefly breached parity on 13 July, as markets reacted to US inflation figures. That was followed by an immediate rebound that sent EUR/USD back above 1.0100.
As of 15 July 2022, the pair has fallen over 12% year-to-date to trade around the 1.00 level.
EUR/USD began 2022 at $1.1375, down from $1.2275 at the beginning of 2021. 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.
The pair fell below $0.99 on September 5 for the first time in 20 years as a result of Russia shutting down its main gas pipeline to the EU, severely jeopardizing the euro zone's economic prospects.
Midway through December, the EUR/USD traded back up to around the $1.06 level due to a weaker dollar and declining US Treasury yields. 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. However, the pair benefited from a general decline in the value of the US dollar as inflationary pressures in the country continued to subside.
The euro-to-dollar exchange rate started in 2023 at $1.0703 and increased during the month of January, topping $1.08 for a brief while.
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 strategy for you and work it out first on a demo account, and then on a real account.
A great reason to open a trading account with CAPEX.com! We provide a user-friendly trading app with an outlook for novices as well as experienced traders and investors.
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