Are you hesitating about whether to exchange euros? Watching the euro exchange rate rise and fall, worried that changing now might lead to losses? In recent years, global inflation, central bank policies, and geopolitical factors have made the euro’s trend increasingly unpredictable. This article provides a full analysis of the key factors affecting the euro, incorporates expert forecasts for 2025, and offers clear investment and exchange strategies to help you determine whether now is the best time.
In recent years, volatility in the euro exchange rate has increased significantly, adding complexity to decision-making for individuals and businesses with currency exchange needs or engaged in forex investment. Against the backdrop of an uncertain global economic outlook and diverging central bank policies, the question “Will the euro fall further?” has become a focal point of market attention. This article reviews recent trends, provides an in-depth analysis of the five key factors influencing the exchange rate, and incorporates forecasts from authoritative institutions to deliver a comprehensive outlook on the euro. The goal is to help you make more informed financial decisions in an unpredictable market.
Before we begin the analysis, let’s establish a common understanding: exchange rate forecasting is never an exact science, but an art grounded in data and logic. What we can do is grasp as many influencing factors as possible to glean where the future may be headed. Next, CashbackIsland will guide you step by step to demystify the euro exchange rate.
To predict the future, we must first understand the past. Looking back at the first half of 2024, the euro’s trajectory was full of twists and turns, with bullish and bearish factors intertwined, resulting in a clear pattern of range-bound fluctuations.
At the start of 2024, markets broadly expected the Federal Reserve (Fed) to begin rate cuts earlier than the European Central Bank (ECB), a view that initially supported the euro. However, as US inflation data proved stubborn, expectations for Fed rate cuts were repeatedly pushed back, the dollar regained strength, and the euro came under pressure. Several key turning points are worth noting:
For readers in Taiwan and Malaysia, in addition to focusing on the core EUR/USD pair, the EUR/TWD trend is equally important. While the two are highly correlated, subtle differences still exist:
| Currency Pair |
Main Influencing Factors |
Volatility | Key Focus |
| EUR/USD | Interest rate differential between the ECB and the Fed, comparison of US and European economic data, global risk sentiment | Relatively high, as it is the most heavily traded currency pair globally | Assessing the euro’s relative strength against major global reserve currencies |
| EUR/TWD | In addition to EUR/USD movements, it is also influenced by Taiwan’s central bank policies, Taiwan stock market performance, foreign capital flows, and import/export trade data. | Relatively low | More closely reflects the actual costs of currency exchange, travel, studying abroad, or investing for people in Taiwan |
Simply put, when analyzing EUR/TWD, you need to apply a “two-step approach”: first determine the overall direction of EUR/USD, then layer on Taiwan’s own economic and capital flow factors. For example, even if the euro strengthens against the dollar, a surge in Taiwan stocks and heavy foreign capital inflows could make the TWD stronger, limiting the rise of EUR/TWD or even causing it to fall.
💡 Expert Tip: When analyzing exchange rates, never focus on a single currency pair alone. Use EUR/USD as the core reference, then combine it with the unique factors of the local currency to reach a more comprehensive conclusion.
Factor One: European Central Bank (ECB) Monetary Policy Outlook
This is the core of all factors influencing the euro exchange rate. The central bank’s main tool is interest rates. When the ECB raises rates, interest on euro deposits increases, attracting international capital inflows and driving the euro higher; conversely, rate cuts weigh on the euro. Investors should closely monitor:
Factor Two: US Federal Reserve (Fed) Interest Rate Decisions
In the forex market, no currency exists in isolation—everything is relative. The euro’s movement largely depends on its main counterpart: the US dollar. The most important factor driving the dollar is undoubtedly the Fed’s monetary policy. The “policy dance” between the ECB and the Fed forms the main theme of EUR/USD trends.
Factor Three: Core Economic Data in the Eurozone (CPI & GDP)
A strong economy is the foundation of a strong currency. The two most important indicators are:
Factor Four: Geopolitical Risks (e.g., Ongoing Russia-Ukraine Conflict)
Geopolitical stability in Europe has a direct impact on the euro. For example, the outbreak of the Russia-Ukraine conflict once triggered an energy crisis that severely hit the European economy and led to a sharp depreciation of the euro. In the future, any events that could affect regional stability—such as election results, trade disputes, or conflict escalations—may spark risk aversion in the market.
In such scenarios, traditional safe-haven currencies like the US dollar, Japanese yen, and Swiss franc are typically favored, while risk currencies such as the euro tend to be sold off.
Factor Five: Market Sentiment and Speculative Behavior Analysis
In the short term, market sentiment and speculative positioning exert significant influence. These can be monitored through certain indicators:
By understanding how these five factors interact like gears, you can elevate your ability to analyze euro exchange rate trends to an entirely new level.
After considering the fundamental factors above, let’s take a look at the specific forecasts from major investment banks and analysts for the euro in 2025. Please note that these projections are time-sensitive and should be used for reference only.
As of mid-2024, market views on the euro’s trajectory in 2025 remain divided, but there is broad consensus that volatility will persist.
| Institution | EUR/USD Forecast (End of 2025) | Key View Summary |
| Goldman Sachs | Optimistic Bias (1.12–1.15) | The US economy is expected to slow, the Fed to begin a rate-cut cycle, and the dollar to weaken; meanwhile, the eurozone economy is expected to recover moderately. |
| Morgan Stanley | Neutral to Pessimistic (1.05–1.08) | Believes US economic resilience will exceed expectations, the Fed’s rate cuts may be later and smaller than the market anticipates, and the eurozone’s economic recovery will be weak. |
| Barclays | Neutral (1.08–1.10) | Believes ECB and Fed policies will move toward alignment, with little change in interest rate differentials, and the euro will remain range-bound. |
Disclaimer: The above forecasts are for informational purposes only and do not constitute investment advice.
In addition to fundamentals, technical analysis also provides important reference points. From long-term charts (weekly, monthly), we observe:
For traders, operating near these key levels while setting stop-loss orders is a common strategy.
To better prepare for future uncertainty, we can consider two extreme scenarios:
📊 Investment Insight: Successful investors never bet on only one scenario. They prepare contingency plans for different outcomes and adjust strategies according to actual market developments.
After all this analysis, we still need to return to the most practical question: what should I do? Here are some actionable suggestions for different needs.
If you will need euros in a few months (for example, for travel or studying abroad), your goal should be to lock in a relatively favorable average cost rather than trying to catch the absolute lowest point.
The advantage of this method is that it smooths out exchange rate volatility and avoids the risk of converting all your money at the peak.
For investors aiming for profit, strategies need to be more refined, and risk management must always come first.
If you are optimistic about the euro but don’t want to hold physical currency, there are several financial instruments to choose from:
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Overall, the euro’s exchange rate in 2025 is expected to continue oscillating between the ECB’s cautious dovish stance and the Fed’s data-dependent approach. Whether the eurozone economy can genuinely overcome weakness and whether US inflation cools as expected are the two core variables that will tip the balance. Will the euro fall further? In the short term, due to policy divergences, the euro may still face pressure; however, in the medium to long term, once the US enters a clear rate-cut cycle, the euro could see a rebound opportunity.
For investors and currency exchangers, rather than trying to predict every short-term market fluctuation, it is better to establish a clear strategy framework. For travelers exchanging currency, “buying in batches to lower the average cost” is the key to coping with volatility. For forex investors, the focus should be on “identifying major trends and strictly adhering to risk discipline.” Whatever your goal, continuously monitor the five key factors discussed in this article and adjust your strategy according to the latest market developments to navigate the uncertain world of foreign exchange successfully.
Since its introduction in 1999, the euro to US dollar (EUR/USD) reached its historical high in July 2008 at approximately 1.6038. The historical low occurred in October 2000 at around 0.8225. These extreme values reflect the unique global economic conditions at the time, such as the eve of the 2008 financial crisis and the aftermath of the 2000 dot-com bubble burst.
They have a very direct impact. Generally:
The core of this impact is the change in the “interest rate differential” between the two countries.
Inflation is a key basis for the European Central Bank (ECB) to formulate monetary policy.
You can check real-time rates through multiple channels:
