Somewhere in around mid-2009, the market quote for EUR/USD pair had peaked to 1.50. In mid-2010, the quote fell to 1.19 and again rose to 1.48 in April 2011. From then onwards, the market suffered continuous downfall with 1.34 in 2013 and reached a peak of 1.16 in 2015. Most traders, especially large banks or corporate firms, invest in the forex market on a long-term basis, and this is where an EUR/USD long term forecast counts.
Long term forecast generally involves prediction on a monthly or yearly basis. The market hardly makes large fluctuations within a week and institutions investing a large sum of money generally look for large returns. Simply put, investment of USD 100,000 at a market price of 1.19 in 2010 will reap a profit of 24.369% when sold in 2011 at 1.48.
Thus, long term EUR USD forecast is necessary while investing large sums. Even for small traders or newbies, this can be helpful, and you may end up with similar 24% profit depending on the market quote shift. Find out how.
The Leverage concept
Go with leverage. Invest USD 1,000 into your forex account and go for 10:1 or 100:1 leverage. A 100:1 leverage will allow you to transact with $100,000. Now, if EUR/USD long term forecast predicts that the market is expected to rise considerably over the next two years, then you may also fetch a profit of nearly 24% just by investing $1000.
Also, the profit made leaves you with USD 1,240 and a further 100:1 leverage will enable you to transact with USD 124,000 this time. Remember, you are receiving 12% return annually on your initial investment. That is more than any bank will pay.
The wait and watch policy
Now suppose EUR/USD long term forecast 2015 reveals that the pair currency quote will fall from its current 1.12 to 1.04 in 2016 and again rise to 1.18 in 2017. So do you buy Euros now to make money in 2017? It is better to wait for the market to fall in 2016. At a lower market price, you get to buy more Euros than you could have in 2015 and make more profit in 2017.
Forecasting will give you an idea about the coming year, and the price can be expected to hover around the forecasted range. Even if the market does not fall by the predicted amount, it will definitely fall to some extent.
You will know when to sell in order to stop loss. Say you have purchased Euro based on EUR/USD long term forecast 2015 at 1.08. Now, predictions till 2018 show that the market may not raise drastically over the next few years, and it will stay in the 1.11 range. Hence, here comes your decision to sell the Euros at the low-profit margin and invest the return on some other high yielding currency pair.
So, even if you are not some large corporation or huge bank, chances of making money from the forex market is same for you. EUR/USD long term forecast will enable you to look far ahead and decide your steps accordingly. Find out more and do perform forecasting before investing in this volatile market.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.