EUR/USD 2024-2025: Technical analysis and profitability outlook for the most important pair in Forex

Is it worth positioning in the euro/dollar parity during the upcoming months? The answer will depend on how we interpret macroeconomic indicators and the chart patterns presented by the market. Before making predictions, it is important to understand why this currency pair attracts so much attention among institutional and retail traders.

The Magnitude of EUR/USD in Global Markets

The pair between the euro and the greenback is the most liquid trading instrument on the planet. Since its introduction in 1999, when the euro replaced historical references such as the German mark or the Italian lira, this pair has dominated Forex transactions worldwide.

The figures from the BIS (Bank for International Settlements) are revealing: the daily spot volume is around 2.2 trillion dollars, while including forwards and derivatives, it reaches 7.5 trillion. This market depth implies that price movements are relatively contained, making it an interesting asset for both intraday trading and medium-term positions.

Technical Analysis: Bullish Triangle with Mixed Signals

Looking at the current chart structure, we observe a symmetrical triangle formation pointing upward, with the key resistance at 1.1255. However, technical indicators present a more complex picture.

The 50, 100, and 200-session moving averages do not currently indicate a clear direction. The price has been oscillating between these lines with back-and-forth movements in recent weeks, suggesting market indecision.

In terms of momentum, the RSI remains in contraction territory without reaching oversold levels, while the DMI shows a predominantly bearish direction, although an imminent crossover could change this reading.

Euro-Dollar Forecast Scenarios for 2024 and 2025

Using Fibonacci extension levels as a reference, we can outline two horizons:

Short-term (end of 2024): A constructive scenario suggests the parity could reach 1.12921 as the first relevant target. This hypothesis is based on the premise of a euro strengthened by certain macroeconomic catalysts.

Medium-term (2025): Extending the analysis, the most probable projection indicates a potential peak near 1.21461 before a subsequent correction. In a baseline scenario, this correction would not significantly break below 1.15.

The Decisive Role of Monetary Policy in EUR/USD

The real catalyst that will define this pair’s trajectory during 2024-2025 is the cycle of easing interest rate policies in both the United States and Europe. After a period of freeze (FED at 5.50% in late July 2023; ECB at 4.50% in early September 2023), the market now anticipates gradual reductions.

Historically, the FED has set the pace followed by the ECB. Relevant institutions project that the Federal Reserve will start cuts in December 2024 (expected range 4.50%-4.75%), while the European Central Bank would be at 4.00%. By 2025, both entities are expected to continue lowering rates, reaching 3.75%-4.00% for the FED and 3.00% for the ECB.

This interest rate differential, initially favorable to the dollar, could partially reverse if the FED accelerates its reductions significantly ahead of the ECB, which would strengthen the euro’s relative position.

Historical Context: From Bearish Channel to Bullish Outlook

Since 2008, the pair has traded within a broad downward channel, originating when the FED brought rates to zero to combat the financial crisis, while the ECB maintained more restrictive stances.

The COVID-19 pandemic marked a turning point. The US responded with massive stimulus (for example, a $2 trillion package in early phases), which pushed EUR/USD from 1.0780 in March 2020 to 1.2299 at year-end. Subsequently, the ECB’s TLTRO programs began to reduce that advantage.

The most disruptive event came in February 2022 with the Ukraine conflict, which worsened the geopolitical situation in the eurozone and pressured the parity downward, consolidating resistance levels at current levels.

Key Factors: A Balanced View

Favorable dynamics for the dollar

• FED balance sheet reductions (tapering)
• Increases in interest rates
• Repatriation of capital by US corporations
• Movements toward safe-haven assets during turbulence
• US GDP growth

Pressures on the dollar

• Recession risks in the US economy
• Emerging economies reducing dependence on USD
• FED balance sheet expansion through liquidity injections
• Lower interest rates making the currency cheaper
• Loss of confidence in relative economic strength

Support elements for the euro

• Rate hikes by the ECB when conditions permit
• Gradual improvement in eurozone indicators
• Unemployment reduction (though with disparities among member states)
• Normalization of regional banking activity

Obstacles for the euro

• Massive liquidity injections expanding the monetary base
• Rate cuts compressing the unit value
• Debt purchase programs fragmenting the market
• Geopolitical volatility from regional conflicts

How to Position: Trading Options for Retail Investors

Retail investors have three main ways to access movements in EUR/USD:

Investment funds: Less attractive option, as they replicate portfolios in currency-denominated assets without explicitly exploiting exchange rate fluctuations.

Futures contracts: Forward instruments that allow gains if the exchange rate moves according to the forecast. They require more initial capital and margin management.

CFD contracts (: The most accessible alternative, especially with leverage. Since a standard lot represents 100,000 units of the base currency and typical movements are moderate, CFDs facilitate exposure to relevant positions with reduced capital, enabling both short-term trading and longer-term positions.

Risks and Final Considerations

Although technical and fundamental forecasts point in a certain direction, no analysis is exempt from surprises. Unexpected events )black swans( can quickly reshape the market narrative. Additionally, the decentralized nature of geopolitical and economic issues means a crisis in one region can be an opportunity in another.

The structural volatility of EUR/USD will remain contained due to its market depth, but this does not eliminate the need to properly size positions and maintain discipline in risk management.

In conclusion, the euro/dollar parity remains one of the most profitable and accessible Forex assets for investors seeking exposure to predictable exchange movements, as long as they stay constantly attentive to the macroeconomic developments underpinning it.