Detailed Analysis of the EUR/USD Pair: Euro Price Forecast and Trading Strategies

EUR/USD currency pair represents the intersection between the two leading economies in the world - the European Union and the United States. This is the currency pair accounting for over 50% of the total trading volume on the global Forex market, with extremely high liquidity. Understanding how it operates, the influencing factors, and especially predicting the euro exchange rate will help investors make more informed decisions.

What Is EUR/USD? Basic Things You Need to Know

The EUR/USD exchange rate ( symbol €/$) reflects the exchange relationship between the Euro - the common currency of the European Union - and the US dollar, the primary currency of the United States. In the foreign exchange market, this rate indicates how many US dollars are needed to buy one Euro.

The EUR/USD pair is favored by traders because it represents the two largest economies with extensive global influence. Any changes in monetary policy or economic data from both regions can cause significant fluctuations.

How to Calculate the EUR/USD Exchange Rate

If the current EUR/USD rate is 1.30, it means 1 Euro can be exchanged for 1.30 US dollars. Suppose you own 250 EUR, you can convert it to: 250 × 1.30 = 325 USD.

Conversely, if you have 255 USD and the rate is 1.15, the amount of Euros you can receive is: 255 ÷ 1.15 = 165.65 EUR.

Historical Volatility and Key Milestones

The EUR/USD currency pair has experienced many significant fluctuations, especially since the COVID-19 pandemic. The average monthly volatility reaches 77 pips, indicating high dynamism of this exchange rate.

Major historical events affecting EUR/USD:

Key Factors Influencing Euro Exchange Rate Predictions

Factors Affecting the Euro

The Euro is influenced by many factors from the European Union:

• Monetary policy of the European Central Bank (ECB) - interest rate changes, bond purchase programs
• Economic conditions of member countries - especially Germany, France, Nordic countries
• Budget deficits and public debt - concerns in countries like Greece, Italy, Spain
• Employment rates and wages - reflecting economic health
• GDP growth - overall indicator of economic development

Factors Shaping the US Dollar Value

The USD is affected by US economic indicators:

• GDP growth rate - indicating the health of the world’s largest economy
• Federal Reserve monetary policy (Fed) - the most influential tool affecting USD
• Unemployment rate - indicator of labor market health
• Trade deficit and current account - reflecting trade balance
• Trade policies and international relations - treaties, tariffs
• Consumer Price Index (CPI) - measures inflation

USD is considered a “safe haven” - during major global uncertainties, investors tend to move funds into USD, causing the dollar to appreciate.

Analyzing and Forecasting the Euro Exchange Rate for Different Periods

Period 2020-2021: Growth After the Pandemic

After the ECB announced a massive economic support package from March 2020, the EUR/USD began a long-term upward trend, from 1.06 to 1.18 - an increase of 1,200 pips. Despite concerns about Europe’s recovery (dependent heavily on tourism), ECB’s support measures fostered market optimism.

Period 2022-2023: Uncertainty

Major events impacting euro forecasts during this period:

Impact of the Ukraine conflict: The war in Ukraine pushed energy prices (oil, gas) higher, increasing production costs for industries. The EU relies heavily on energy imports from Russia, while the US is less affected. This puts pressure on the Euro against the USD.

China’s Zero-Covid policy: Continued COVID-19 restrictions slowed China’s economy, a major trading partner of the EU, posing risks to Europe’s growth.

US inflation: Higher inflation pressures in the US forced the Fed to raise interest rates rapidly, making USD more attractive to investors.

Detailed Monthly Forecasts (2022)

June 2022: Opening rate at 1.064. Expected to fluctuate between 1.053-1.085, with an average of 1.068 and ending at 1.069 (change +0.5%).

July 2022: Opening rate at 1.069. Expected to fluctuate 1.021-1.069, with an average of 1.059 and ending at 1.037 (change -3.0%).

August 2022: Opening rate at 1.037. Expected to fluctuate 1.008-1.038, with an average of 1.027 and ending at 1.023 (change -1.4%).

September 2022: Opening rate at 1.023. Expected to fluctuate 1.007-1.037, with an average of 1.022 and ending at 1.022 (change -0.1%).

October 2022: Opening rate at 1.022. Expected to fluctuate 0.994-1.024, with an average of 1.012 and ending at 1.009 (change -1.3%).

EUR/USD Trading Strategies: Two Main Approaches

Strategy Based on Economic Indicator Analysis

This method focuses on predicting market trends based on economic indicator releases. There are three basic forms:

1. Active Strategy: Traders position themselves about 20 minutes before an important indicator release, based on personal forecasts of market direction (Long or Short).

2. Reaction Strategy: Traders do not predict in advance but wait for the actual indicator release, then compare with market expectations. If data exceeds expectations, Euro is bought; if worse, Euro is sold.

3. Combined Strategy: Combining the above two to optimize profits and minimize risks.

Technical Analysis Strategy

This method uses technical indicators such as:

• Parabolic SAR - identifies stop-loss points and trend reversals
• MACD - detects changes in market momentum
• Support and resistance levels - identify key price zones

This approach requires traders to have experience in distinguishing real signals from false signals to make accurate decisions.

Optimal Trading Times for EUR/USD

Although the Forex market operates 24/5, not all times are suitable for trading EUR/USD.

Most ideal time: 20:00 - 23:00 (Vietnam time). This is when both European and American trading sessions are active, making the market lively with volatility up to 25 pips.

Second time window: 15:00 - 18:00 (Vietnam time). The European session just opened, with volatility potentially reaching 22 pips.

By weekdays:

• Thursday: Most active (volatility up to 90 pips)
• Wednesday and Friday: Volatility of 78 pips
• Monday: Quietest (around 60 pips)

This variation stems from the timing of major economic indicator releases, often concentrated from mid-week onward.

Other Major Forex Currency Pairs

Besides EUR/USD, 6 other major currency pairs are widely traded:

With USD as the quote currency:

• USD/JPY (US Dollar/Japanese Yen)
• USD/CHF (US Dollar/Swiss Franc)
• USD/CAD (US Dollar/Canadian Dollar)

With USD as the base currency:

• GBP/USD (British Pound/US Dollar)
• NZD/USD (New Zealand Dollar/US Dollar)
• AUD/USD (Australian Dollar/US Dollar)

These currency pairs have strong correlations with EUR/USD through forex correlation (forex correlation). Traders should pay attention to these correlations to optimize strategies and risk management.

Summary

The EUR/USD pair is one of the most important trading opportunities in the Forex market due to high liquidity and significant volatility. Mastering the influencing factors, analysis methods, and especially the ability to predict the euro exchange rate will help investors maximize profits.

Success in trading EUR/USD depends on a combination of solid fundamental knowledge, appropriate strategies, and disciplined execution. Always remember that understanding economic factors, geopolitical market influences, and technical mechanisms will be the foundation for making wise decisions in the foreign exchange market.