Euro-TWD Investment Must-Read: 20 Years of Data and Future 5-Year Opportunities

Want to invest in Euro-TWD but don’t know where to start? Why not first take a look at what the second-largest reserve currency in the world has experienced over the past 20 years. From the 2008 financial crisis to the Eurozone debt crisis, and recent geopolitical turmoil, each fluctuation hides opportunities for investors to profit.

Will the Euro-TWD still rise in the next 5 years? The key depends on these three points

Whether investing in Euro-TWD can be profitable is not about guessing, but depends on three core factors.

First, whether the Eurozone’s economic growth can turn around. Currently, the pain point in the Eurozone is near-zero economic growth, coupled with aging industries and frequent geopolitical shocks. The latest manufacturing PMI has fallen below 45, reflecting a rather pessimistic economic outlook for the next half year. But precisely because of this, once the economy hits bottom and rebounds, Euro-TWD will enter an upward cycle.

Second, the direction of the European Central Bank’s monetary policy. When the Federal Reserve in the US started signaling a rate cut cycle at the end of 2023, the ECB remained cautious. Although Euro interest rates are lower than US rates, maintaining relatively high rates can stimulate Euro-TWD to strengthen. Historically, during several US rate cut cycles, the dollar index usually drops significantly within 3 to 5 years, which is a positive for the euro.

Third, changes in the global economic situation. If the global economy grows strongly, demand for Eurozone products increases, and Euro-TWD will appreciate; conversely, capital may flow back to the US, leading to euro depreciation.

The past 20 years of Euro-TWD ups and downs

To predict the future, we must first understand history.

July 2008 peak, when EUR/USD surged to 1.6038, was the last hurrah before the financial tsunami. At that time, Lehman Brothers’ collapse triggered a global credit crunch, European banks faced enormous pressure, and businesses and consumers had difficulty financing, leading to economic recession. Although the ECB cut rates and launched quantitative easing, these measures put downward pressure on the euro. Soon after, the Eurozone debt crisis erupted, with Greece, Ireland, Portugal, Spain, Italy, and others facing debt issues. Market doubts about the euro’s overall value led to a 9-year decline in Euro-TWD.

January 2017 low, when EUR/USD fell to 1.034. But before and after, the situation began to turn around. The ECB’s easing policies started to take effect, the Eurozone’s unemployment rate fell below 10%, and manufacturing PMI broke above 55, boosting market confidence. Additionally, optimistic expectations for the French and German elections, and easing Brexit negotiations, caused the euro to rebound after severe overselling.

February 2018 short-term high, when EUR/USD rose to 1.2556, a new high since May 2015. But the good times didn’t last. The Fed continued tightening and hinted at further rate hikes, strengthening the dollar index and putting pressure on the euro. Meanwhile, Eurozone economic growth slowed, Italy’s political situation was unstable, and Euro-TWD retreated.

September 2022 20-year low, when EUR/USD dipped to 0.9536. The main reason was the Russia-Ukraine war, which heightened risk aversion and drove funds into the dollar. But a quick turnaround followed: the ECB raised interest rates twice in July and September, ending 8 years of negative interest rates; energy prices gradually declined, easing corporate costs; and concerns about the war eased. Euro-TWD then started to rebound.

Investment strategies for 2024 and the next 5 years

Based on past patterns and current conditions, investors can make the following predictions:

In the first half of 2024, Euro-TWD may be relatively weak, but if the US begins to cut rates and no major financial crises occur, the euro is likely to regain an upward trend until the ECB significantly cuts rates. If major geopolitical events happen in the next five years, capital may flow back to the US, strengthening the dollar and weakening the euro.

This means investors should closely monitor economic data and news from the US and Eurozone to judge the overall economic direction.

How should Taiwanese investors participate in Euro-TWD investment?

For investors with different risk preferences, there are multiple options:

Bank foreign exchange accounts are suitable for conservative investors. You can open foreign exchange accounts through Taiwanese commercial banks or international banks to trade, but usually only buy long positions, not short, and there may be capital limits.

International forex brokers are the first choice for small and short-term investors. They offer CFD trading platforms with flexible leverage, suitable for traders seeking high returns.

Securities firms also provide forex trading services, allowing investors to buy and sell foreign exchange on designated platforms.

Futures exchanges are suitable for experienced investors, enabling trading of euro futures through futures markets.

Final reminder for investing in Euro-TWD

The outlook for Euro-TWD investment depends on a comprehensive assessment of economic growth, central bank policies, and global circumstances. Past 20 years of data show that every crisis also contains opportunities, but only if you understand the economic logic behind them.

Investors should continuously monitor ECB policies, Eurozone economic data, and Fed decisions. Only by understanding these key variables can you find genuine investment opportunities amid Euro-TWD fluctuations.