EUR/USD in 2024: Understanding the dynamics of the pair is essential for safe trading

The euro forecast against the US dollar continues to be a central topic for those active in the currency market. The EUR/USD pair, which traded within narrow ranges during 2023, began to show increased volatility starting in 2024. Currently quoted around 1.16232 with a decrease of -0.18%, the pair continues to generate opportunities and challenges for traders seeking to position themselves strategically.

What explains the recent movements of EUR/USD?

The current dynamics of the euro forecast are driven by two main factors: the monetary policies of the two major economies and macroeconomic data that feed the market.

On one side, the European Central Bank (ECB) signals a more flexible stance, maintaining low interest rates to stimulate the eurozone. On the other, the US Federal Reserve (Fed) seeks to raise its interest rates as an inflation control tool. This divergence in policies creates a pressure environment on the euro, favoring the US dollar in the short term.

Market forecasts for 2024 point to a range between 1.128 on the high and 1.094 on the low, compared to the 1.0743 observed in June. This range reflects uncertainty about which political force will dominate in the coming months.

Technical reading: what do the charts reveal

Technical indicators offer an important perspective on possible future movements:

Moving Averages (MA): Except for the 100-day moving average, nearly all MA indicators signal selling pressure. This suggests that buyers may be losing strength in the medium term.

Relative Strength Index (RSI): The RSI around 45 indicates a neutral scenario, with no clear signs of oversold or overbought conditions. This position allows room for movements in both directions.

MACD: Operating in negative territory, the MACD reinforces the expectation of continued downward movements. Traders monitoring this indicator tend to maintain short positions.

Overall, technical analysis points to a moderate downward trend for the upcoming periods, with the possibility of occasional corrections.

Economic factors shaping the euro forecast

In addition to technical indicators, concrete economic data define the behavior of EUR/USD:

Economic Growth (GDP): An increase in the eurozone GDP could strengthen the European currency. Conversely, solid US employment data tend to boost the dollar.

Unemployment Rate and Inflation (CPI): These indicators are critical for monetary policy decisions. High inflation in the US justifies rate hikes by the Fed, while low unemployment signals a heated economy.

US Treasury Yields: The rise in returns on US bonds attracts global capital to the US dollar, creating demand that appreciates the dollar against the euro.

This combination of factors explains why the euro forecast remains challenging: there is not just one dominant force, but a dynamic balance between them.

Why is trading EUR/USD interesting?

Even amid volatility, there are reasons why this remains one of the most sought-after pairs:

• Exceptional liquidity: As the most traded pair globally, it offers tight spreads and quick execution
• Regulated markets: Both economies have robust regulation, ensuring transparency and security
• Competitive costs: The forex market allows for smaller margins compared to stocks and commodities
• Flexibility: Multiple strategies can be applied, from quick trades to structural positions

Practical recommendations for traders

Building a solid strategy for EUR/USD requires discipline:

1. Combine analyses: Use both technical tools and fundamental data before taking positions
2. Monitor events: Central bank decisions, employment reports, and inflation data are potential triggers
3. Set protections: Stop-loss orders prevent losses from amplifying in unexpected movements
4. Diversify risks: Spread across other pairs like GBP/USD (1.34006, -0.28%), USD/JPY (158.563, +0.11%) or AUD/USD (0.66863, +0.09%) to reduce concentrated exposure

The euro forecast for the coming quarters remains surrounded by uncertainty, but traders equipped with accurate information and consistent risk management can identify opportunities even in volatile scenarios. Success in EUR/USD requires continuous study, monitoring relevant news, and strategic adjustments as new information emerges.