The EURUSD currency pair is one of the most popular and widely traded in the world. As we head into 2024, there is much speculation around where the euro dollar exchange rate could go. This comprehensive guide provides an in-depth EURUSD forecast for 2024 based on technical and fundamental analysis.
Introduction
The euro (EUR) and US dollar (USD) are the two most actively traded currencies globally. The EURUSD pair represents the value of the euro in US dollar terms. The exchange rate fluctuates constantly based on economic factors, central bank policies, geopolitics, market sentiment and technical levels.
For forex traders, understanding the key drivers and likely trajectory of the EURUSD rate in 2024 is essential to make informed decisions. This extensive review analyzes the technical picture, economic fundamentals, interest rate differentials, quantitative easing policies, political risks and expert projections to provide an accurate EURUSD forecast for 2024.
EURUSD Historical Price Action
Before predicting future price action, it is instructive to analyze historical EURUSD levels. Looking at the long-term EURUSD chart provides critical context on technical levels and price behavior.
Key EURUSD Technical Levels
- All-time high: 1.6038 in July 2008
- All-time low: 0.8230 in October 2000
- 10-year range: 1.05 – 1.45
- 2022 range: 0.95 – 1.15
Notable Price Action
- EURUSD fell sharply from 2008 highs during the European debt crisis.
- The pair traded in a range between 1.05 and 1.45 from 2015 to 2020.
- In 2022, the exchange rate dropped to 20-year lows below 0.98 due to diverging central bank policies.
Current Market Situation
- As of October 2023, EURUSD is trading around 1.05 after rebounding from 0.95 levels.
- The pair is consolidating above the key psychological level of 1.00.
- There is strong horizontal support around 1.03 and resistance around 1.10.
EURUSD Forecast 2024: Technical Analysis
Technical analysis looks at historical price charts and market sentiment to forecast future moves. Here are the key technical drivers that could impact EURUSD direction in 2024.
Support and Resistance Levels
EURUSD has some well-defined support and resistance zones that are likely to remain pivotal in 2024.
- Strong support between 1.02 and 1.05. This area has repeatedly stopped declines since 2000.
- Firm resistance around 1.10 which has capped upside moves since 2022. A break above opens upside potential.
- The 2022 high of 1.15 is the next key barrier if EURUSD rises above 1.10 convincingly.
Market Psychology and Sentiment
Current market psychology remains slightly euro negative but less pessimistic than mid-2022. Bears believe the Fed will maintain an aggressive stance, limiting EURUSD upside. Bulls see room for more gains after the 2022 sell-off was overextended. The consensus expects range trading to continue near-term.
Trend Analysis
- The long-term EURUSD trend has been down since 2008. However, the pair has carved out a neutral basing pattern between 1.03 and 1.10 since 2022.
- In the medium-term, EURUSD is in a tentative uptrend after rebounding from below 0.98. But the rally lacks momentum currently.
- The short-term trend is sideways to marginally positive above 1.03 support.
Key Chart Patterns
- A large symmetrical triangle visible on the weekly chart between 1.03 and 1.10. A breakout from this pattern could signal the next major trend.
- The daily chart shows EURUSD trading inside an ascending channel since July 2022. The lines offer both support and resistance.
Fibonacci Levels
- The 50% retracement of the move down from 2008 highs comes around 1.13 which aligns with the 2019 peak. This is a critically important medium-term hurdle.
- The 61.8% Fibonacci at 1.18 and 78.6% level at 1.25 offer upside targets if EURUSD breaks above 1.15 convincingly.
Forecast 2024: Technical Takeaway
- Technically, expect range trading to continue in 2024 between long-term support at 1.03 and resistance around 1.10/1.15.
- A decisive break below 1.03 support could open downside towards parity.
- Alternatively, a break above 1.15 resistance sets up a test of the 1.18-1.25 area.
EURUSD Forecast 2024: Fundamental Analysis
While technical analysis looks at price charts and indicators, fundamental analysis examines economic factors that impact euro dollar valuation. Here are the key fundamental drivers to watch in 2024.
Relative Economic Growth
Disparities in eurozone and US economic growth will remain a primary driver of EURUSD moves.
- The eurozone economy is forecast to grow just 0.5% in 2023 and 1.5% in 2024 according to the ECB. Persistent energy supply and inflation risks cloud the outlook.
- Comparatively, the Fed predicts the US will grow 1.2% in 2023 and 2.0% in 2024, outpacing Europe.
- Faster US growth supports a stronger dollar and weighing on EURUSD.
Interest Rate Differentials
With the Fed and ECB at different stages of policy tightening, interest rate differentials will impact EURUSD direction.
- The Fed has hiked rates sharply to 3.75%-4% in 2022 to curb inflation and is expected to increase into 2023/24 if needed.
- The ECB only began raising rates in July 2022 from -0.50% and is seen reaching around 2.5% by end-2024, lagging the Fed significantly.
- Higher US rates are positive for the dollar and bearish for EURUSD.
Quantitative Easing Policies
While the Fed is aggressively tightening policy, the ECB is still providing stimulus via quantitative easing bond purchases.
- The ECB is maintaining asset purchases to aid the eurozone economy while the Fed is reducing its balance sheet.
- This policy divergence has weighed on the euro in 2022. Less accommodative ECB policy could support EURUSD.
Eurozone Economy and Political Developments
The state of the eurozone economy and political risks can heavily sway EURUSD sentiment.
- Persistent inflation and gas supply uncertainty are headwinds for the euro area economy. An EU recession in 2023 is probable.
- However, if the bloc shows greater resilience than expected or energy concerns subside, the euro could benefit.
- Key elections in Germany and elsewhere in 2023/24 also inject political uncertainty into the mix.
US Economy and Politics
The robustness of the US economy and geopolitical developments will affect the dollar’s safe haven status.
- A resilient job market and strong consumer spending supports USD. But risks of a US recession in 2023 have grown.
- The outcome of the 2024 US presidential election could stoke volatility later in 2024.
Forecast 2024: Fundamental Takeaway
- Fundamentally, euro headwinds remain prominent, limiting EURUSD upside potential in 2024.
- But the Fed potentially pausing rate hikes and euro negativity easing could stabilize and lift the pair.
- Overall, the fundamental backdrop supports more euro/dollar range trading in 2024.
EURUSD Forecast 2024: Key Risks and Tail Risks
Along with the primary technical and fundamental factors, speculators and hedgers also watch risks events that could unexpectedly impact EURUSD valuation. Here are the key tail risks or ‘black swan’ events to monitor.
Russia-Ukraine Crisis Escalation
A major escalation in the conflict such as Russia weaponizing energy flows or attacking NATO supply lines could spur safe haven demand benefitting USD over euro.
Global Recession Risk
If global growth significantly deteriorates including a US recession, it could dent Fed tightening expectations and undermine USD strength relative to euro.
Financial Crisis in China
Given high debt levels, a financial crisis in China could ripple across global markets. This could boost the safety bid in USD compared to euro.
Eurozone Fragmentation Risks
Though reduced now, resurfacing worries over debt sustainability and the future of the monetary union could weigh heavily on EURUSD.
Unanticipated Shift in Central Bank Policies
If the Fed suddenly pauses or reverses policy direction, or the ECB surprises with accelerated tightening, it could trigger big EURUSD swings.
Forecast 2024: Risks Takeaway
While hard to predict, any of these tail risk scenarios materializing, especially concurrently, would upend the baseline EURUSD outlook. Traders must hedge against abrupt policy or geopolitical shocks.
EURUSD Forecast 2024: Expert Projections
Examining forecasts from banks, institutions and analysts provides further insights into expert consensus and the variety of EURUSD projections for 2024.
Bank EURUSD Forecasts for 2024
| Bank | EURUSD Forecast |
|---|---|
| Morgan Stanley | 1.05 |
| Goldman Sachs | 1.15 |
| JP Morgan | 1.10 |
| Barclays | 1.08 |
| BNP Paribas | 1.12 |
Key Points
- Most major investment banks expect EURUSD to trade in a range between 1.05 and 1.15 in 2024.
- Morgan Stanley has the lowest forecast at 1.05 while Goldman Sachs sees a rally to 1.15.
- There is convergence around technical resistance at 1.10/1.12 being a pivot point.
Institutional EURUSD Forecasts for 2024
| Agency/Firm | EURUSD Forecast |
|---|---|
| International Monetary Fund | 1.12 |
| World Bank | 1.08 |
| Organisation for Economic Co-operation and Development | 1.10 |
| Bloomberg | 1.05 – 1.15 range |
| Standard Chartered | 1.13 |
Key Points
- Global institutions predominantly expect more euro/dollar consolidation in 2024.
- Most forecasts fall between 1.05 and 1.15, wider than 2022 range of 0.95 to 1.15.
- IMF and Standard Chartered have highest projections around 1.12/1.13 area.
Individual Analyst EURUSD Forecasts
| Analyst | Firm | Forecast |
|---|---|---|
| Shahab Jalinoos | Credit Suisse | 1.15 |
| Jeremy Stretch | CIBC | 1.10 |
| Christopher Turner | ING | 1.08 |
| James Rossiter | TD Securities | 1.05 |
| Lee Hardman | MUFG | 1.12 |
Key Points
- Analyst forecasts are also largely clustered between 1.05 and 1.15.
- Credit Suisse’s Jalinoos is most bullish seeing rally to 1.15 resistance.
- TD Securities’ Rossiter has lowest outlook at 1.05 support area.
Forecast 2024: Expert Projections Key Takeaways
- The consensus expects EURUSD will trade rangebound between 1.05 and 1.15 in 2024.
- Fundamental euro headwinds point to potential downside risk.
- But technicals suggest solid support around 1.03/1.05 will limit meaningful declines.
EURUSD Forecast 2024: Trading Strategies
Based on this comprehensive EURUSD 2024 outlook covering both technical and fundamental perspectives, here are effective trading strategies to consider.
Range Trading Strategies
- With technicals pointing to defined support and resistance and fundamentals supporting consolidation, trading the range makes sense.
- Look to buy dips near 1.03/1.05 support and sell rallies approaching 1.10/1.15 resistance. Target range extremes.
- Use stop-losses on both sides to limit risk and adjust based on volatility.
Breakout Trading Strategies
- Keep an eye out for a decisive break of 1.15 resistance or 1.03 support which could signal a wider trend.
- If EURUSD breaks above 1.15 with momentum, go long targeting the 1.18 to 1.25 zone.
- Or if EURUSD breaks 1.03 support decisively, consider short positions targeting parity.
Hedging Strategies
- For investors with euro exposure, hedge vs dollar downside by buying puts around 1.03 strikes.
- For USD-based investors, buy calls around 1.15 strikes to hedge against upside breakouts.
- Manage option timings and rollovers based on outlook changes.
Forecast 2024: Trading Strategies Key Takeaways
- Favor range trading tactics until a breakout takes shape. Use stop-losses.
- Be alert for support or resistance breaks that can signal directional trades.
- Consider hedging via euro puts or dollar calls to limit rate risks.
EURUSD Forecast 2024: Conclusion
In conclusion, this comprehensive EURUSD forecast covering all essential technical and fundamental factors suggests more rangebound price action in 2024.
Technically, robust support around 1.03 and solid resistance at 1.10/1.15 could contain the pair. Fundamentals also point to competing forces such as euro weakness versus an aggressive Fed limiting meaningful upside or declines.
But traders must watch for potential breakouts from the technical ranges or unexpected fundamental shocks. Being nimble and quickly adjusting to market conditions will remain key.
Overall, expectations of an extended period of euro/dollar consolidation between 1.03 and 1.15 makes range and hedging tactics prudent trading strategies for EURUSD in 2024.
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