EUR/USD: What to Expect from the Dollar Trend in the Coming Days in the European Context

The EUR/USD pair continues to be one of the most traded currencies in the global foreign exchange market. The relationship between the euro and the US dollar attracts the attention of investors and professional traders seeking to capitalize on the fluctuations of this highly important asset. In the coming days, understanding the dynamics of this pair is essential, especially in Portugal and other eurozone countries, where exchange rate fluctuations directly impact local economies.

Current scenario: where we stand with the EUR/USD

Over the past twelve months, the EUR/USD has shown quite irregular behavior. Throughout 2023, it remained within a relatively contained range, reflecting global economic uncertainties. However, starting in early 2024, a significant increase in volatility was observed. Projections for this year indicate a range between 1.128 (maximum expected) and 1.094 (minimum), with mid-2024 trading near 1.0743.

The reason behind these fluctuations lies in multiple factors. Both European and American monetary policies are experiencing turning points, creating an environment conducive to more pronounced currency movements.

Fundamental perspective: economic drivers

When analyzing macroeconomic factors, two main players stand out: the European Central Bank (ECB) and the US Federal Reserve (Fed).

The ECB adopts a more cautious stance in 2024, signaling the possibility of maintaining interest rates at contained levels for a longer period. This strategy aims to stimulate economic growth in the eurozone, a crucial goal for countries like Portugal that depend on the region’s overall performance.

On the other hand, the American institution follows a different path. With inflation still present in the US economy, the Fed maintains pressure on interest rates, strengthening the dollar by attracting investment flows into US Treasury bonds with more attractive yields.

From an economic data perspective, indicators such as GDP, unemployment rate, and the Consumer Price Index (CPI) become extremely relevant. An increase in European economic activity could potentially raise the euro, while solid data from the US labor market would boost the greenback.

Technical analysis: chart signals

From a technical standpoint, indicators suggest a trajectory of moderate euro depreciation against the dollar in the upcoming periods.

Moving averages reveal a mixed situation. Most of them signal selling pressure, except for the 100-period moving average, which maintains a less pessimistic outlook. The Relative Strength Index (RSI) is around 45, indicating a state of balance without a clear bias to either side. Meanwhile, the MACD operates in negative territory, reinforcing signals of a continued downtrend.

The convergence of these technical signals points to a possible continuation of bearish pressure on the EUR/USD in the coming days.

Why EUR/USD remains attractive to traders

Despite technical challenges, this currency pair offers very favorable characteristics for market participants:

Exceptional liquidity: being the most traded pair globally, it offers competitive spreads and ease of execution, regardless of trading volume.

Robust regulatory environment: both European and US markets are under strict supervision, ensuring transparency and security in operations.

Strategic opportunities: volatility creates openings for short-term trades and well-structured arbitrage strategies.

Effective diversification: for investors in Portugal and Europe, trading USD/EUR provides protection against local fluctuations and genuine diversification of exposures.

Reduced costs: the forex market allows leverage with smaller operational margins compared to other assets like stocks or commodities.

Practical guidelines for trading EUR/USD

Currency trading, while potentially profitable, requires strict discipline. Some practices are essential:

Combine technical and fundamental analyses in your decisions. Do not rely solely on one method. An integrated understanding of the factors provides greater security in entering and exiting positions.

Stay alert to economic calendars and political events that may influence the pair. Central bank decisions, employment data releases, or geopolitical events can generate abrupt movements.

Always implement stop-loss orders (stop-loss) in your trades. This tool limits losses in scenarios of unexpected adverse movements, crucial for proper risk management.

Diversify your capital across multiple assets and pairs. Concentrating everything in EUR/USD exposes your portfolio to unnecessary risks. Diversification reduces vulnerabilities.

Conclusion: EUR/USD in the coming days

Accurately predicting the trajectory of the EUR/USD remains a challenge even for experienced professionals. However, armed with solid analyses, understanding of economic factors, and appropriate technical tools, more assertive decisions can be made.

The dollar’s trend in the coming days suggests a continuation of slight downward pressure on the euro, but this scenario may reverse as new economic data emerge. For investors in Portugal and other eurozone regions, monitoring the EUR/USD evolution remains critical for financial planning and hedging strategies.

Always remember: market knowledge, prudent risk management, and constant updates on the global macroeconomic context are your best allies in this currency journey.