Euro to Dollar : All You Need To Know!
Hello and welcome to another of my currency sites, which I hope will
give you
all the information you need about
Euro to dollar
exchange
rates, both as an investor and also as a trader. If you are looking for
the current rates, below is a currency converter which I hope you will
find useful. The rates are updated several times a day, so they will
always be up to date.
If you would like to check the current rates, please just click on the link alongside and a new window will pop up in the same screen. Simply select the currencies of your choice using the drop down box, and then enter the amounts that you would like to convert.
If you would like my view on where I think the currency pair may be heading in the future, then please just drop me a line via the 'ask Anna' button in the navigation bar, or alternatively have a look at my trading blog which covers both currency and investing. As a currency trader myself I often post comments on the EUR/USD pair as it is the most widely traded - I can't promise that I'm always right, but at least it will give you an idea from someone who trades for a living!!
Euro to Dollar : The Risks Of Investing Overseas
Whether
you are a resident living in Europe, an investor in Euro assets, or a
trader in currency like myself, understanding where the Euro is likely
to be in several months or several years time is vital, if you are to
make the right investment decisions for the longer term. As the US
dollar continues to weaken against all the major currencies around the
world, buying assets in the US, whether these are properties, stocks, or
bonds, can look extremely attractive at the moment. In the last few
years we have seen the Euro rise from a rate of 1.07 against the US
dollar to it's current level which is approaching 1.50. So what would
have happened had we been investing in US dollars over the last few
years - let's take a look at a simple example.
Suppose we had purchased a property in the US in 2003 for 500,000 US dollars, perhaps an overseas holiday home. In 2003 we would have had to pay 467,000 euros based on an exchange rate of 1.07 from the above chart. Now imagine that we have decided to buy the same property today ( assuming that property values have not increased ), then this would only cost us 340,000 euros - a huge saving, and purely based on the fact that in the last few years, the Euro has strengthened against the US dollar which has weakened. Now of course every cloud has a silver lining. Had you indeed bought in 2003 and now decided to sell, then you would effectively be losing this amount, so in any decision you always have to consider both the buying and selling of the asset and the timescales over which you are proposing to hold the asset, and be exposed to currency exchange, both good and bad.
In simple terms, if your home currency is strengthening against a foreign currency then it is working in your favour as an overseas buyer and investor, and conversely if your home currency is weakening against a foreign currency, then it is working against you!
Now, let's go back to our example and suppose you had decided to buy and mortgage the property in 2003 using dollars. Imagine you had borrowed 50% at 250,000 US dollars, and paid the rest in cash. In order to keep this simple I have created a table below and assumed an interest rate of 5% and a simple interest only mortgage.
| Average Euro to Dollar exchange rate | Monthly Repayments in Dollars | Monthly Repayments in Euros | Total Repayments For The Year | |
| Year One | 1.07 | 1041 | 972 | 11,664 |
| Year Two | 1.15 | 1041 | 905 | 10,860 |
| Year Three | 1.20 | 1041 | 867 | 10,404 |
| Year Four | 1.30 | 1041 | 800 | 9,600 |
| Year Five | 1.40 | 1041 | 744 | 8,928 |
As you can see, the Euro to dollar exchange rate is working in our favour when it comes to our mortgage repayments! Remember however, that it is not all good news - the 250,000 dollar element of our property which would have cost us 233,644 euros when we bought it, is now only worth 178,571 euros when we sell. This is why buying assets overseas can be fraught with danger if you do not consider all the currency exposure risks very carefully.
If we had bought the property in 2003, then an interesting situation occurs, where the exchange rate works for us on the mortgage repayments, but against us on the capital value, so it pays to do your homework and to consider all the aspects very carefully.
Euro to Dollar : Understanding Charts
As you may know, I trade currency for a living so reading charts is second nature for me. For those of you who are simply looking for the best exchange rates from the Euro to dollar, I hope the above simple example illustrates why it might be worth spending some time understanding these candle charts, so that you can take a view of where you think the currency may be heading in the future. If you would like some help please have look at my currency trading site and trading blog which are in the navigation bar at the top of each page, or alternatively follow the link here to currency trading - all the information is provided free, and on the trading and investing blog you will find my suggestions on where I believe the Euro to dollar is heading in the future.
Charts can be confusing particularly with currency, as you are always comparing one currency with another - in this case the Euro to dollar. As you can see the exchange rate of one against the other is going up, so if you were offered Dollars for your Euros, would you rather receive 1.0 dollar for each Euro, or 1.50 dollars for each Euro - that way it's easier to remember - just think, would I rather have more of the currency for my base currency, or less - easy really! Always think in terms of holidays and spending money - just imagine if the rate for the Euro to dollar went to 2.0 - you would get 2 dollars for every one Euro, which is great if you live in Europe, but awful for the American visitors!!
I hope the above has explained some of the risks you need to be aware of when investing in assets overseas, now let's have a look at some of the factors which can affect the Euro to dollar exchange rates.