For the last months of this year and well into 2025, the driving force of foreign exchange markets and the entire financial system will be the normalization of monetary policy in both the EU and the United States. As central banks make moves to adjust their policies, the effects will significantly shape market sentiment and investment strategies globally.
The Romanian presidential elections as well as the US presidential elections will have minimal long-term effects on the currency market. Other factors, including China's economic trajectory, weak liquidity across market segments, and geopolitical developments in the Middle East, remain unpredictable and could influence the market.
USD/RON and EUR/RON forecast for Q4 2024
In the context of Romania's presidential elections, analysts expect increased volatility for RON crosses but believe the long-term impact will be minimal.
Analysts don't expect a significant drop in the USD/RON rate. Given the current strength of the dollar, if the rate approaches 4.44, it could trigger a technical rebound, similar to what occurred a month ago. This will drive investors to buy dollars again in anticipation of a rise.
As for the EUR/RON, there is short-term upward potential, with a target of 5.00. This is largely driven by lower bond yields, driving investors to put tactical bets on the euro in hopes of short-term gains. This also explains the recent increase in EUR/USD. However, this trend is not expected to last, and analysts predict no sustained rise in the euro next year, including against the RON.
EUR/USD forecast for Q4 2024
If the U.S. election results are uncontested – a major question – analysts forecast the EUR/USD to fluctuate between 1.07 and 1.12 until the end of the year. Two key structural factors will influence the EUR/USD rate this year and beyond:
- US Economic Outperformance: With the Federal Reserve aggressively cutting rates and US productivity near 3%, the US economy is expected to outpace Europe in the coming years. This could attract investors seeking higher returns, supporting a strong dollar.
- US Stock Market Outperformance: Strong equity performance in the US, particularly in the S&P 500 and Nasdaq indexes, will attract capital inflows, further boosting the dollar.
iBanFirst estimates that the dollar index is currently overvalued by 9.3%, although this is still below the 1980s peak of over 20%. This overvaluation is likely to persist for the years to come.
Founded in 2016, iBanFirst offers a next-generation cross-border payment experience that combines a powerful platform and the support of FX experts. With more than 350 employees in 10 European countries, processing a volume of transactions worth more than €1.4 billion each month, and listed by the Financial Times as one of Europe's fastest-growing companies, iBanFirst became in less than 10 years a trusted partner for SMEs across borders.
