EUR/USD Investment Outlook for 2024-2025: Euro-Dollar Forecast Analysis and Profitability Viability

Why is EUR/USD the most relevant currency pair?

The euro against the dollar is undoubtedly the most traded currency pair in international markets. This prominence is due to it encompassing the two currencies of the world’s leading economic powers: the European Union and the United States. Since its initial quotation in 1999, when the euro replaced historic currencies such as the German mark or the Italian lira, this pair has established itself as a benchmark in the Forex market.

The figures supporting this relevance are compelling. According to the Bank for International Settlements (BIS), which groups representative banking entities accounting for 95% of the global GDP, the average daily volume traded in spot transactions reaches $2.2 trillion. When including forwards and derivatives, the total daily volume of the Forex market is around $7.5 trillion. These magnitudes reflect the unparalleled depth of this market and the reliability it offers to institutional and retail investors.

Euro dollar forecast: technical analysis for 2024-2025

The euro dollar forecast for the coming years requires a multidimensional analysis combining chart pattern reading with technical indicators. Currently, the EUR/USD pair shows an ascending triangle setup, with key resistance levels above current prices.

Regarding technical indicators, the situation shows some ambiguity. The 50, 100, and 200-session moving averages do not indicate a clear trend, oscillating between bearish breakouts and recovery attempts. The RSI remains in contraction territory without reaching oversold levels, while the DMI indicates a bearish directionality, though with potential for reversal soon.

Euro dollar forecast scenarios for 2024

Applying Fibonacci extensions to technical analysis, a moderate bullish scenario suggests that EUR/USD could approach levels of 1.12921 before the year ends. This target implies a favorable hypothesis for the euro, supported by macroeconomic factors that will be discussed later.

Euro dollar forecast for 2025: longer-term projections

Extending the outlook to 2025, technical models indicate that the pair could reach highs near 1.21461, followed by a corrective phase. However, this correction should not significantly break below the 1.15 level, suggesting a sustainable trading range.

Monetary policy dynamics: the true engine of the euro dollar forecast

The primary factor influencing EUR/USD in 2024 and 2025 is the easing of monetary policies in both the US and Europe. After maintaining rates frozen (FED at 5.50% at the end of July 2023 and the ECB at 4.50% in early September 2023), both entities are in a phase prior to rate cuts.

Historically, the Fed sets the tone for the ECB. Projections indicate that the Federal Reserve will begin rate reductions in December 2024 to a range of 4.50%-4.75%, continuing in December 2025 toward 3.75%-4.00%. The European Central Bank, in turn, is expected to reach 4% by December 2024 and 3% by December 2025.

This temporal lag in rate cuts would initially lead to euro appreciation against the dollar, as the Fed would be the first to loosen its restrictive policy. However, by 2025, the convergence of monetary policies could reverse this dynamic, allowing for a potential rebound of the dollar.

Historical context: how we got here

Since 2008, EUR/USD has moved within a broad downward channel initiated when the Fed reduced rates to 0% to combat the financial crisis, while the ECB maintained higher rates. The COVID-19 pandemic created a boomerang effect: the US implemented massive money injections (including a $2 trillion package) accelerating recovery and weakening the dollar, which drove EUR/USD from 1.0780 on March 25 to 1.2299 on December 31, 2020.

Subsequently, the activation of the ECB’s TLTRO programs began eroding this euro advantage. The turning point came in February 2022 with the invasion of Ukraine, which worsened Europe’s geopolitical position. Although September 2022 brought a temporary reversal, the pair faces persistent resistance near 1.1255, reflecting uncertainty between both currencies.

Variables influencing EUR/USD quotation

Factors favorable to USD

The dollar’s strength is supported by several pillars: the reduction of the Fed’s balance sheet, interest rate hikes, repatriation of capital by US corporations, the safe-haven appeal during financial crises, US GDP growth, and regulatory incentives.

Elements weakening USD

Conversely, US local recessions, the gradual abandonment of the dollar by strengthened emerging economies, expansion of the Fed’s balance sheet with liquidity injections, rate reductions, and loss of confidence in the US economy act as brakes.

Positive catalysts for EUR

The EUR benefits from rate hikes by the ECB, economic improvement in the Eurozone (although with variations among member countries), reduction in unemployment, expansion of Eurosystem banking activity, and overall GDP growth.

Negative pressures on EUR

Expansion of the money supply through liquidity injections, rate reductions devaluing the euro, massive debt purchase programs, rising unemployment, and geopolitical volatility (such as the energy crisis resulting from sanctions on Russia) negatively impact the euro.

Investment mechanisms in EUR/USD: available options

For retail investors, there are three main channels:

Investment funds: Less recommended option, as they invest in monetary instruments without leveraging pair fluctuations.

EUR/USD futures: Forward contracts that generate profits if the exchange rate matches the forecast at expiration, allowing for speculative trading.

CFD contracts (: Considered the most efficient method for retail Forex. Leverage allows access to significant positions with limited capital. Since one Forex lot represents 100,000 units of the base currency and movements are moderate, CFDs are especially useful for short-term and intraday trading, also enabling hedging long positions with defensive short positions.

Risk and volatility considerations

Although the forecasts are based on rigorous analysis, no economy is immune to unexpected events )black swans( that can alter regional or global dynamics. The complexity of both economies operating with partially desynchronized cycles means that problems in one region could present opportunities in another.

However, both EUR and USD will remain as capital assets in the global Forex, suggesting that extreme volatilities are unlikely. Careful calibration of positions according to individual risk profiles is essential.

Conclusion: viability of investing in EUR/USD

Investing in EUR/USD, as the main asset of the global Forex market, offers opportunities grounded in historically low relative volatility levels and clear macroeconomic drivers. The euro dollar forecast for 2024-2025 suggests moderate upward movements followed by consolidation, supported by well-defined monetary policy dynamics.

Monitoring macroeconomic indicators—especially inflation data, interest rate decisions by both authorities, and growth figures—will enable investors to adjust their positions in line with actual developments versus market projections. The depth of the EUR/USD pair ensures reliable access and competitive commissions for daily trading.