It has been a varied two years for the Euro, which has fluctuated against many global currencies, owing to the Russian invasion of Ukraine and the spectre of rising inflation in countries within the eurozone.
The Australian dollar was one of a number of currencies that strengthened against the Euro over the early part of 2022 before the Euro began to pick up strength again in September 2022.
In February last year, the Euro was worth 1.54 Australian dollars, but that gained marginally to $1.64 AUD by early July and ended at $1.62 AUD on December 31, 2023.
The Euro’s Performance in 2023
In July of 2023, Joseph Capurso, head of international and sustainable economics at The Commonwealth Bank, told Forbes Advisor Australia he didn’t expect much change for the rest of 2023 for the EURO/AUD conversion rate.
Instead, it was anticipated that the two currencies would stabilise against one another.
This prediction rang true, with the average of the Euro/AUD pair over 2023 sitting at 1 Euro to $1.66 AUD.
Despite the stability this afforded currency pairing, the Euro was also affected by rising inflation just like the Australian economy and the Aussie Dollar.
However, unlike the Australian dollar which is used in a single country, the Euro is the official currency of 19 of the 27 European Union (EU) member countries.
Those 19 countries, known as the eurozone, are impacted by the value of the Euro in different ways, with Germany, being the largest economy in the eurozone, most affected.
Despite these conditions, at of the end of 2023, the Euro was considered the 8th strongest currency in the world.
Related: USD to AUD Forecast
AU Dollar Performance and Drivers in 2023
As ANZ’s head of FX research, Mahjabeen Zaman, explained to Forbes Advisor Australia, the AU dollar is a pro-cyclical currency, meaning it appreciates in good times and depreciates in bad times.
Therefore, with the current economic uncertainty happening in Australia over the previous 12 months, the AUD has been depreciating in value against other currencies: particularly the USD.
Speaking with Capurso early last year, he said it was expected that the Euro/AUD conversion rate would stabilise at its current rate with “not much change” anticipated for the year 2023: a prediction that rang true.
Related: GBP Pound to AUD: Modest Hopes for Pound After Horror Year
Euro to AUD Forecast for 2024
At the start of 2024, the Aussie dollar fell against the Euro to $1.51 AUD. However, it has recovered quickly and, at the time of writing, is trading at 1 Euro to $1.66 AUD.
Once again, it’s expected that the Euro/AUD forecast will stay steady over the course of the year, Zaman told Forbes Advisor Australia.
“The combination of gradual uplift in EU economic data will be offset by a gradually rising AUD as risk sentiment improves and the RBA holds rates steady for longer than other major central banks,” Zaman says.
“These competing forces will keep the EUR/AUD rangebound for the foreseeable future.”
This continues even into 2025, with ANZ predicting that the AUD to EUR conversion will be 0.61 at the end of both December 2024 and December 2025, Zaman said.
