In this post I’m going to answer the question: When is the best time to buy euros on the foreign exchange market? Hopefully this will be useful whether you’re going on holiday to Europe, or even planning to emigrate.
The answer to this question can be boiled down to two points:
- There is in fact no single best time to buy euros. This is because the foreign exchange rate is changing on a constant basis.
- It’s better to think about what is the best euro exchange rate given the current range, rather than getting the best rate of all time.
Let’s look at these points in more detail then.
1. There is no best time to buy Euros.
Obviously this isn’t what you want to hear if you’ve clicked on a post called, When is the best time to buy euros? Nonetheless it’s the unfortunate truth.
This is because currencies on the foreign exchange market are changing all the time in a way no one can predict, so the euro value that’s available one morning might not be available the next, or even an hour from then. This is just how the market works.
The reason the market is unpredictable is because millions of investors are buying and selling currencies all the time, based on countless factors around the globe. So it’s not just a case of, “If something good happens in Europe, the euro goes up” because if something better happens in the US at the same time, that might be more influential, and so on.
The basic idea is that exchange rates are unpredictable. Even highly trained traders on the London stock exchange lose money betting on currency movements.
2. It’s better to think about the best euro rate given the present range.
But of course, we hear all the time about how the pound is at an eighteen month high against the euro, or the dollar at a six month low. So what’s going on there?
The idea here is that currencies move in peaks and valleys, so that the rate can reach highs and lows compared to where it’s been in the past.
For instance, the pound might reach 1.22 against the euro one afternoon, then not reach that same point again for nine months. When it does, that’s hence a nine month high against the euro. It’s the best time to buy euros in nine months.
So when you buy euros, it’s no good thinking, “I want the same rate as 2008” (which would give you about 1.52 against the euro) because the market isn’t moving in that range. Instead, if the market is moving between 1.10 and 1.20 in recent weeks, and you get a rate close to 1.20, then that’s about the best rate you can expect.
In short, the idea here is to be realistic.
I do hope that answers your question. If you have any other questions about changing currencies or transferring money abroad in general, don’t hesitate to visit foreign exchange broker Pure FX.