EUR USD Forecast
The forex forecast business gets hyper-specific when it comes to particular pairs like EUR/USD. When doing the eur usd forecast, we have to know what causes a shift in either of these currencies. There are two ways to do that;
- Technical analysis
- Fundamental analysis
We will not get into the details of these methods, seeing as we have already taken care of that. However, we will talk about the important and known specific things that can cause a shift in currency value.
For each country, the factors affecting them are different and, at times, the same. So, before we get into the specific eur usd forecast factors in each particular country, lets us look at some of the things that they share in common.
As with any nation on earth, some things can happen that cause an instant and predictable shift in the strength of a currency. To start this eur usd forecast article, we are going to look at the specific factors each side of this currency pair contributes.
The Factors That Affect the Euro side of the
These are some of the specific things in the EU that change the rates:
- Changes in the countries that are included in the European Union
- The monetary policy set by the European Central Bank
- Employment rates, job opportunities, etc.
- Deficits in the budget and national debt levels in EU countries
- The economic growth of the countries in the EU
- The domestic politics of each country in the EU and international policies
The Factors That Effect the USD side of the EUR/USD Exchange
- The GDP of the United States
- The Federal Reserve Interest rates
- The money supply allowed by The Fed
- The unemployment rates
- The balance of payments
- White House events and policies
- Social security and Medicare
- The national debt and deficits
- Trade tariffs
These are just a few of the super-specific factors we look at. There are general factors that change slowly and cause massive changes but gradually. We will look at some of them here.
What Affects The EUR USD Forecast?
We will go through all the major points that we think you need to keep your eye on to make sure that you are getting value.
EUR USD News
In the world we live in, there is always something big happening. With a volatile president at the helm of America, the news is ever proliferated with events that shift the strength of the dollar drastically.
At the time of writing this, the Eu is dealing with some homegrown issues. Amid a messy Brexit and what might seem like an impending war on the US side, it is easy to see why the shifts might happen. To do a eur usd forecast that is valuable in terms of information offered, we have to keep our eyes on the news.
If a significant ally of the US or Britain is alienated because leaders from either country did or said something that that causes market sentiment to change, you can bet there is going to be a ripple effect that reaches the FX market.
One wrong word could cause a massive shift in assets and make trends that either work for you or against you, depending on the position you take in the market.
1. Inflation Rates
Inflation is something that happens to almost every country on the planet. In our eur usd forecast, we acknowledge that it is more drastic in some places than in others, but the fact remains that inflation can cause shifts in prices.
A lower inflation rate in one of the two countries will see an appreciation in the value of its currency. The prices of goods and services increase at a rate that is slower where inflation is low. If inflation is higher in one country, the value of the currency will plummet.
With the Brexit fiasco and the many failings of the administration of both countries, inflation is bound to happen, even if slightly.
2. Interest Rates Changing
Any changes made on interest rates affect the dollar and Euro exchange rates. In economics, we know that forex rates, inflation, and interest rates are all correlated. If you increase the interest rates in the EU, for example, the currency of that country appreciates.
Higher interest translates to higher rates for lenders, and that means more foreign capital flows into the country. If any of these countries raise their interest rates, the eur usd forecast will be affected. When looking at the EUR USD News, we can predict how things will play out.
3. Balance of Payments
Balance of trade and all earnings made on foreign investments are essential. We look at all the transactions that a country has made concerning the other country. Among the most important things to look at, we have; exports, debts, imports, etc.
A deficit in this current account happens when one of the two powerhouses is spending more of their currency on importing stuff than they are making on sales of exports. A deficit will lead to a depreciation of said currency.
The balance of payment causes changes in the exchange rate of the local currency.
4. National Debt
Of the two economic powerhouses, we look at when making the eur usd forecast; the national debt is one of the most important things we look at. When the government debt is enormous, a country will find it hard to get foreign capital, and that will lead to inflation.
A decrease in value will show up when this happens, especially if the foreign investors decide to sell their bonds on the open market, as soon as the government debt of a country is predicted. EUR USD Forecast takes into account such matters and includes them in the predictions.
EUR USD Forecast Takes Time
When it comes to making predictions, especially for major currency pairs like the eur usd forecast, time is significant. Since there is a lot to look at, we try to narrow everything down and focus on the most critical parts of it all.
That way, we can come up with accurate results you can use. The eur usd forecast needs you to pay attention to the news at all times. Without that kind of vigilance, there is a perfect chance that you might miss something, and that might translate to catastrophe for your position in the market.