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EURUSD analysis and price prediction 2024: dip below 1.05 again before a long-term recovery to 1.15? Is parity a possibility?

Euro to Dollar forecast & price prediction 2024
Cristian Cochintu
Cristian Cochintu
19 December 2023

The euro continued to hover below the $1.1 mark as investors processed the array of central bank actions. The ECB maintained steady rates and resisted expectations of rate cuts, while the FED hinted that its historic tightening of monetary policy is likely completed, signaling a possibility of three rate cuts in 2024.? Here you can find the most recent EurUsd forecast and price predictions by market experts.   

EUR/USD spent most of 2023 in the 1.05-1.10 range. The sideways movement was interrupted only once in July, as the BCE appeared more and more willing to continue raising interest rates towards 2023 to fight inflation than the Fed.  

However, the EUR/USD pair has fallen over 6% from its peak in mid-July, dropping to 2023 lows around 1.05, after 11 consecutive bearish weeks. The combination of a dovish Fed and the ECB sticking to its guns helped spur the euro at the end of 2023 and test the upside levels (1.10) of its 2023 sideways pattern once again.  

The latest institutional Euro to Dollar forecasts are revised higher on expectations that FX markets will be characterized by more trend – a dollar bear trend, that is – and less volatility. 

Key Euro to Dollar (Eur/Usd) Forecast & Price Predictions  

  • Euro to Dollar forecast today: The dollar traditionally performs well at the start of the year and with the eurozone in recession, the first quarter may be too early to see a decisive turn higher in EUR/USD. 
     
  • Euro to Dollar forecast 2024: Analysts forecast the Euro to Dollar exchange rate (EURUSD) to clear the 1.10 level over the coming months and rise towards its fair value. However, analysts caution this does not necessarily mean "the Euro will be supported on its own merits." 
     
  • 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) Forecast 2024 – Fundamental  

Monetary policy in 2024 is likely to have impacts on currencies and be a key focus.

The bold policy decisions made in 2023 are probably going to be undone the following year when central banks start lowering interest rates. The possibility exists that if inflation continues to remain high, central banks may decide to maintain higher interest rates longer than expected.

According to the latest Euro to Dollar forecasts for 2024, if there is to be a EUR/USD rally, it will have to be driven by the dollar leg. Away from the Fed easing story there is also the risk of US fiscal deterioration and de-dollarisation – perhaps both slow-burn stories. There is also the small matter of the US election.  

The headwinds to a EUR/USD rally largely stem from weak eurozone growth and the risk that the ECB chooses to cut rates alongside the Fed. This would limit the expected narrowing in yield differentials at the short end of the curve.

US Dollar Forecast: US slowdown is central   

Despite a decline in headline inflation in 2023, the USD has benefited most from high US bond yields and robust growth. However, the strength of the US Dollar is forecasted to turn around in 2024 if short- and longer-term bond yields keep falling. The US economy might be headed for a "soft landing" based on economic statistics.

According to projections, the US economy will contract in 2024, inflationary pressures will continue to decline, and rate cuts by the Fed will probably be part of their monetary policy adjustments. It doesn't appear sure, though, that the Federal Reserve will lower interest rates before any other significant central bank.

Most of the pundits caution against the "louder" Trump 2.0 administration. Based on the direction that the polls go, analysts estimate that any shift in favor of Donald Trump being re-elected will be positive for the dollar, considering his prior experience with the administration's lax fiscal and protectionist policies. Recent polls show Trump is ahead of Biden in 5 of 6 key states but 12 months is a long time in politics.  

Projections released by the Fed showed the central bank would cut interest rates to a median of 4.6% by the end of 2024, which would be three quarter-point reductions from the current targeted range between 5.25%-5.5%.  Officials see GDP at 1,4% in 2024.   

Euro Forecast: ECB at the end of the hiking road

The ongoing energy crisis, the post-pandemic economic recovery, and export declines brought on by global economic slowdowns are all impediments to the Eurozone's weak economic growth. The EU economies had a recession in the second half of 2023, even though regional inflation may have peaked. It's possible that the European Central Bank (ECB) may lower interest rates first. If the rate cut is implemented alone, there is a chance that it will be done too soon, which would hurt the euro.  

However, at the last meeting in 2023, ECB officials emerged from the mandatory media blackout period to dispel the growing speculation that the ECB will be forced to cut interest rates a staggering six times next year. The governing council believes that rates will remain at current levels for a while before considering cuts. Furthermore, stated that markets are a bit optimistic if they foresee rate cuts in the first half of 2024.  

One reason ECB officials are pushing back against rate cuts is that the latest staff projections point to inflation picking up again over the short term, something that could see markets reign in the 150 basis points (bps) worth of cuts for next year. Markets currently price in the possibility of a 50 bps hike in April and a lesser chance of a 25 bps hike even earlier, in March. 

EurUsd Forecast – Technical Analysis 

The combination of a dovish Fed and the ECB sticking to its guns helped spur the euro at the end of 2023. Yield differentials are also helping bring about a rise in the pair after Treasury yields fell off at a sharper rate than that witnessed in Germany.

The German Bund is often used as a benchmark for EU yields. The chart below shows US yields outpacing those in Germany, but the EU-US yield differential has shown a sharp move to the upside recently, strengthening EUR/USD toward the upper band of the trading range.

EurUsd Forecast – Technical Analysis
EUR/USD Daily Chart Compared to the German/US 10-Year Yield Differential (orange line) - Source: TradingView

EUR/USD rebounded from the 1.05 low, rising above the 200 SMA and breaking out above the rising channel to 1.10. Note that the key support and resistance levels 1.05 and 1,10 coincide with the 38.2% and 50% Fibonacci retracement level, while the high of the year 2023 close to 1.13 coincides with the 61.8% Fib, considering the previous downtrend.  

Sellers will look towards 1.05, a break below here opening the door to more downside at 1.02.  

Buyers need to rise above 1.1050, for a continuation of the actual uptrend toward the next resistance level at 1.1280, followed by the 1.15 level, the most anticipated in the latest Euro to Dollar forecasts and price predictions from institutional investors and banks. 

Euro-to_Dollar_Forecast_2024.png
EurUsd Weekly Chart - Source: CAPEX WebTrader

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 Predictions 2024  

Here we look at the Euro to Dollar (EUR/USD) forecast for 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.

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.

Bullish Euro to Dollar Forecast 2024

ING's end-year 2024 EUR/USD forecast of 1.15 is slightly above the current consensus of around 1.11. In terms of timing the trajectory, their current bias is that EUR/USD strength will become more apparent from the second quarter onwards. The dollar traditionally performs well at the start of the year and with the eurozone in recession, the first quarter may be too early to see a decisive turn higher in EUR/USD.

ING's forecast for a higher EUR/USD next year hangs wholly on the view that the US will slow down, inflation will ease, and the Fed will be able to make monetary policy less restrictive. Currently, we forecast 150bp of Fed easing starting next May/June. This is premised on tighter financial conditions finally weighing enough on aggregate demand to see US growth converge on the stagnant trajectories, especially in Europe. Their team forecast US growth at just 0.5% next year versus the consensus of 1.0%.

The Dutch bank forecast three-quarters of negative eurozone growth (3Q23 to 1Q24 inclusive) and full-year 2024 eurozone growth at just 0.2%. They expect 75bp of European Central Bank (ECB) easing in 2024 starting in the third quarter, but clearly, the risk is that the ECB eases earlier and the Fed later such that the starting pistol for the EUR/USD rally is never fired. 

Bearish Euro to Dollar price prediction 2024 from Morgan Stanley

Morgan Stanley provides its 2024 outlook for major currency pairs, including EUR/USD. The bank's forecast is shaped by expectations of technical recessions in the eurozone,

The bank forecast the eurozone to enter technical recessions, prompting their central banks to start cutting rates in the second quarter of 2024. The anticipated weak growth and falling rates are expected to weigh on the EUR.

The EUR/USD is forecasted to return to parity (1.00) by Q1 2024 and remain around that level for most of the year.

Bullish Euro to Dollar price prediction from Bank of America

Bank of America's 2024 Euro to Dollar forecasts confirm it is more bearish on the U.S. Dollar than the consensus, with analysts saying Federal Reserve interest rate cuts "matter more for the market" than cuts at other central banks.

Bank of America (BofA) forecasts the Euro to Dollar exchange rate (EURUSD) to clear the 1.10 level over the coming months and rise toward its fair value. However, analysts caution this does not necessarily mean "the Euro will be supported on its own merits."

The coming USD weakness will be premised on expectations that U.S. economic growth will "land" and create a smaller outperformance gap for the U.S. versus others in a "U.S. recoupling".

Bullish Euro to Dollar Forecast 2024 from Commerzbank

Commerzbank analysts forecast the Euro to Dollar exchange rate (EUR/USD) to strengthen to 1.12 by June 2024 before fading to 1.08 by March 2025.

The bank continues to expect the US economy to slide into recession in 2024 and the Fed to cut its key interest rate by a total of 150 bps in response. However, as the market still seems confident that the US economy will manage a ‘soft landing’, they forecast the EUR/USD pair to rise to around 1.12.

Bearish Euro to Dollar price prediction 2024 from Goldman Sachs

Goldman Sachs doubts that US yields will decline further in the short term and added; “for FX in particular, we still think it will be hard to erode much more of the Dollar’s appeal at this stage.”

Goldman also expects that the US economy will be resilient. In part this reflects the fact that the US household sector is less sensitive to higher interest rates due to the impact of long-term mortgage fixes. It also considers that European economies are more sensitive to higher interest rates and the dollar is liable to strengthen further if the US economy continues to out-perform.

Goldman notes that the Euro-Zone inflation is declining sharply. Although markets are expecting ECB rate cuts in 2024, Goldman notes that short-term pricing is still firm. It considers any adjustment in these expectations on recession risks would be likely to trigger notable Euro losses.

Energy prices will be important for the Euro with the currency in a better position if energy prices decline while strong upward pressure on prices would tend to undermine the Euro.

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.

Bullish Euro to Dollar Price Prediction 2024 from Scotiabank

FX Strategists at Scotiabank commented, "The charts suggest the EUR’s rally is starting to struggle above 1.10, as was the case in late November when the spot topped out at 1.1017. Intraday price action does look potentially soft.

According to Scotiabank consolidation is likely to remain the near-term theme: “Underlying trend dynamics remain bullish, however, and still suggest limited scope for EUR weakness and ongoing pressure for EUR gains to extend. Above 1.0960 targets 1.11.”

On the downside; “Support is 1.0870/1.0875; loss of support here could see corrective EUR losses towards 1.0775.”

Scotiabank forecasts the EUR will be able to push on to 1.11/1.12 in the next few weeks.

Bullish Euro to Dollar price prediction from Credit Agricole

Credit Agricole forecasts only very gradual Euro gains; “We expect the Fed to cut rates in 2024 and 2025. Yet, slow growth outside the US and other major central banks starting easing cycles as well will limit the USD fall. EUR-USD will likely rise to 1.13 at end-2024 and will probably hit 1.15 only in late 2025.” 

Bearish Euro to Dollar Forecast 2024 from Wells Fargo

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. 

Bearish Euro to Dollar Forecast 2024 from 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.

Bearish Euro To Dollar Forecast from 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 February 2024 EurUsd price predictions from the most popular AI-based sources.

Wallet Investor

Algorithm-based website Wallet Investor’s EUR/USD forecast the pair to close 2024 slightly below 1.05, with a maximum rate of 1.08.   
In a longer-term projection, Wallet Investor’s EUR/USD forecast for 20245 had the pair potentially reaching a high of 1.045 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. 

Long Forecast

As of the end of 2023, the service’s EUR/USD forecast for 2024 expected the pair to close the year at 1.047 with a 1.123 high. Long Forecast’s EUR/USD price prediction for 2024 had the pair potentially reaching a maximum price of 1.153. The EurUsd forecast for the next 5 years is to trade around 1.06 according to this algorithm website.  

Trading Economics

The EUR/USD is expected to trade at 1.09 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 1.08.

AI Pickup

The EUR/USD price prediction for 2024 from AI Pickup is bullish – the website saw the pair averaging a rate of 1.2, with a low of 1.13 and a high of 1.22. The following years, however, could see a rise to an average of 1.10-1.20. The platform’s EUR/USD forecast for 2030 and the next 10 years saw the pair trading at 1.21.

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 

  1. 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.  
  2. Monitor the global financial markets. If the S&P 500 and oil are rallying up simultaneously, it may be 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.  
  3. 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.  
  4. 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.
  5. Use Japanese chart patterns and western chart patterns like head and shoulders, double top and bottom, or triangles to identify entry and exit points.
  6. Do not try to use all popular trading strategies; you’d better find the one that suits you best.  
  7. 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 the 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. During the year, the pair traded sideways, with the trading range 10.05-1.10 violated only once in July, toward 1.1280, for a short period of time.

Final words 

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. 

You can start in minutes by opening 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. 

Read also our daily and weekly updates on other markets: 

EUR/USD Analysis and Forecast FAQ 

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Cristian Cochintu
Cristian Cochintu
financial_writer

Cristian Cochintu writes about trading and investing for CAPEX.com. Cristian has more than 15 years of brokerage, freelance, and in-house experience writing for financial institutions and coaching financial writers.