Author, Mike Smith
Below you will find what’s driving the Euro to Dollar exchange rate and what is likely for 2024. We will also provide you with some useful tips and tools to help decide when to exchange Euros into Dollars.
Will the Euro to Dollar rate get stronger in 2024?
There has been no clear trend in the EUR to USD exchange rate so far in 2024. The rate has been confined to a very tight trading range. The difference between the high and low for 2024 has been only 3.5%.
Taking a longer-term perspective, we view the Euro as undervalued relative to the US Dollar. After hitting a decade-low in September 2022, the Euro has rebounded only modestly so far.
To give you some context, the US Dollar was dominant in 2022 as investors were concerned about global inflation. As the US Dollar is considered a safe-haven currency, it benefited from the flight to safety.
However, it’s not like the Euro is seen as a risky currency. It’s also considered one of the safest, most liquid currencies in the world.
Roll forward a few years, and global inflation has fallen significantly and interest rates look to have peaked and are now coming back down.
That in itself should justify a rebound in the Euro as investors rebalance their foreign currency holdings back towards currencies beyond the obvious safe havens such as the US Dollar, Swiss Franc and Japanese Yen.
So why hasn’t the Euro gone up?
A lot of the reason is to do with interest rates.
The EU already began cutting interest rates in June 2024. In contrast, the US Federal Reserve has been in ‘pause mode’.
Bear in mind, interest rates cuts tend to weaken a currency (lower rates attract less foreign investment).
The US Federal Reserve has indicated it could begin cutting rates in September 2024, so maybe that will finally give the Euro a catalyst for recovery.
We believe the forecast EUR/USD exchange rates will be largely driven by interest rate policy. It may simply come down to which central bank cuts the most?
The EU has a base rate of 3.75%, whereas the US base rate is 5.5%. It’s pretty obvious that if inflation moves back to target levels (as the evidence is indicating), then the US has far greater scope to cut interest rates. That should in turn lift the EUR to USD rate – because the US Dollar will weaken more than the Euro.
We don’t see predicting FX rates to 4 decimal places as something that is possible. It doesn’t stop a few (fake) gurus doing so – they are usually flogging a trading programme or course.
Instead, we use a common sense, evidence-based approach.
If you need to transfer money internationally, we can help guide you on the latest news, events, and market trends.
As part of our service, we can monitor exchange rates for you and help you take advantage of any favourable moves.
Is it a good time to buy Dollars with Euros?
Buyers of Dollars want a high Euro to Dollar exchange rate.
The Euro to Dollar rate is often abbreviated to EUR/USD.
The higher the rate, the more Dollars you get for each Euro you exchange.
To understand whether the current EUR/USD exchange rate is good or bad, it’s best to compare it to recent historical data.
At the moment, the Euro to Dollar rate is trending near the lower end of its 5-year trading range.
Relative to recent history, it’s a bad time to buy Dollars with Euros.
Over the last 5 years:
The high for EUR/USD was $1.2489 in February 2018.
The low for EUR/USD was $0.9589 in September 2022.
The highs and lows act as a simple benchmark for the current rate.
There are always short-term trends that can present opportunities too.
Most people don’t have years up their sleeves to wait for the perfect exchange rate.
And even if you did, you will only know it’s perfect in hindsight.
It may be better to track current rates and take advantage of a favourable move.
Euro to Dollar Forecast Poll (1 week, 1 month, 1 quarter)
All exchange rate forecasts are just someone’s opinion.
And no one is correct 100% of the time.
So I think it’s worth seeing a range of opinions before making up your mind.
Here’s something you might find useful…
FX Street provide a handy EUR/USD Forecast Poll.
The page gives you the latest opinions of around 10 different analysts.
It also provides a bullish or bearish bias on the EUR/GBP rate over 1 week, 1 month and 1 quarter.
This Euro to Dollar forecast is ‘bullish’, which means the rate is expected to rise.
Conversely, a ‘bearish’ bias means the EUR/USD rate is predicted to fall.
Something to note – in the short term, most analysts keep their predictions very close to the existing rate.
It takes a brave analyst to risk being very different from the majority.
But there will always be some differences of opinion.
This is why a collection of expert opinions can give you a good gauge of market feeling and help you understand what could be most likely to happen.
Euro to Dollar Forecast Weekly – a common-sense approach
In the short term, over say a week or so, there aren’t that many things that can change.
For that reason, short-term predictions can reflect the current trend, rather than a definite prediction of what experts think will happen.
If you look at an economic calendar, you can see the upcoming events that may affect the Euro to Dollar exchange rate.
I often use DailyFX the Economic Calendar to see what’s upcoming in the finance world.
You can filter the countries you’re interested in and whether events are of low, medium or high importance.
If a significant event is scheduled to happen soon, it could be an opportunity to take advantage of a potential spike in your favour. Or it could be time to act before the exchange rate moves against you.
Remember though, all exchange rate forecasts are still opinions, and no event guarantees that the rate will move in the direction you think.
This is why I would suggest avoiding being too greedy.
If the current rate isn’t currently in your favour, it’s easy to get sucked into hoping the market will make positive moves in the long term.
The market can just as quickly run away with itself in the wrong direction.
Focus on the short term and move when the market makes short-term gains.
If you don’t feel comfortable assessing market forecasts yourself, why not speak to one of our currency exchange representatives?
An important part of our service is to offer assistance and help you talk through your transfer.
So many money transfer companies make you manage the transfer entirely, using an online app.
That’s not the way we do things.
Our representatives take the time to understand why you’re making your transfer and find the best time for you to make it.
They can give you an indication of what could affect the exchange rate in the short and medium term.
This can make your decision far easier when making the transfer.
Euro to Dollar Forecast next 6 months – practical advice
When you look at a forecast over a longer period, it increases the likelihood of a more dramatic movement in the Euro to Dollar exchange rate.
In a week, a 1% swing in exchange rates is considered a large movement.
Over 6 months though, a 5% swing is not uncommon.
Simply put, there’s more time when significant events can happen to affect the strength of the Euro and Dollar.
With this in mind, when should you transfer your money?
I’d recommend making the transfer at a time shortly when the rate moves in your favour.
This sounds simple – but it’s often best not to over complicate your transfer.
Don’t fall into the trap of waiting months for the perfect exchange rate to magically appear, only to be forced to make the transfer at a lower exchange rate.
The typical reasoning for waiting that people regularly say to us is:
“The Dollar is getting stronger; I’ll wait for it to go up further.”
or…
“The Dollar is getting weaker; I’ll wait for it to recover.
It’s easy to think you’ll find the absolute perfect time to make your currency transfer.
With that mindset, sadly the perfect time often passes people by.
Of course, timing matters.
To find a good time to make the transfer, you can use historical exchange rates as a guide.
While looking at historical Euro to Dollar exchange rate charts, I would start by asking these questions:
- When did the rate last trade here?
- How does the rate compare to the high and low of the last 5 years?
- How long has the current trend been running?
Answering these questions will give you a good indication of whether now is a good time to make your currency transfer.
At Key Currency, you can speak directly to a currency exchange expert who can offer insight and help you find the best time for you to make your transfer.
Need guidance on EUR/USD exchange rates?
We’ve all got busy lives.
For most of us, the currency market isn’t something we have time to watch all day.
That’s why it can often pay to speak to a currency exchange expert.
These days, you will find most money transfer companies want you to do the entire money transfer by yourself.
But if you make the transfer at the wrong time, it could potentially cost you thousands.
And you want to make sure all the international payment details are correct.
Why take any chances?
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