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Beranda / Managed Forex Accounts EUR/USD Outlook 2008 1/3

Managed Forex Accounts EUR/USD Outlook 2008 1/3


In 2008, the foreign exchange market entered one of its most volatile and defining periods in modern financial history. The EUR/USD currency pair, the most actively traded pair globally, became a focal point for both institutional and managed forex account investors as economic uncertainty intensified.

This article, Part 1 of a three-part series, explores the macroeconomic backdrop and early-year outlook for EUR/USD during 2008, with a focus on how managed forex accounts approached risk and opportunity.

The Role of Managed Forex Accounts

Managed forex accounts allow investors to participate in currency markets while professional managers execute trades on their behalf. In periods of high volatility—such as 2008—this structure appealed to investors seeking disciplined risk control, diversification, and active management.

For many investors, managed accounts offered:

  • Professional macro and technical analysis

  • Structured risk management

  • Reduced emotional trading decisions

  • Exposure to global currency movements

EUR/USD naturally became a core instrument within many managed strategies.

Economic Backdrop Entering 2008

At the start of 2008, global markets were already showing signs of stress. The U.S. economy faced mounting pressure from the housing market downturn and tightening credit conditions. Meanwhile, the Eurozone appeared relatively resilient, supported by strong exports and higher interest rates.

Key macro factors influencing EUR/USD included:

  • Diverging monetary policy expectations

  • Concerns over U.S. economic slowdown

  • Capital flows favoring the euro

  • Rising risk aversion across global markets

These conditions initially supported euro strength against the U.S. dollar.

Interest Rate Differentials and Currency Strength

One of the primary drivers of EUR/USD during early 2008 was the interest rate differential between the United States and the Eurozone. While the U.S. Federal Reserve moved toward aggressive rate cuts to stimulate growth, the European Central Bank maintained a more cautious stance due to inflation concerns.

This divergence:

  • Increased demand for euro-denominated assets

  • Reduced the dollar’s yield advantage

  • Encouraged carry-style positioning in favor of EUR

Managed forex accounts closely monitored these policy signals when structuring medium-term positions.

Volatility as Both Risk and Opportunity

Although early 2008 favored euro strength, volatility was already increasing. Sharp intraday swings and sudden reversals required disciplined execution and strict risk controls.

Professional managers focused on:

  • Smaller position sizing

  • Wider but well-defined stop levels

  • Technical confirmation alongside macro themes

  • Capital preservation over aggressive returns

For managed accounts, survival and consistency mattered more than short-term gains.

Early Technical Outlook

From a technical perspective, EUR/USD entered 2008 trading near historically strong levels. Trend indicators supported continued upside momentum, but signs of overextension began to appear.

Key observations included:

  • Strong bullish trend structure

  • Increased sensitivity to economic data releases

  • Growing divergence signals on momentum indicators

These factors suggested that while upside potential remained, risk of correction was rising.

Conclusion

The EUR/USD outlook in early 2008 reflected a market shaped by macro divergence, policy uncertainty, and rising volatility. For managed forex accounts, the environment required balance—participating in prevailing trends while preparing for abrupt market shifts.

Part 1 highlights how economic fundamentals and interest rate dynamics initially supported euro strength, setting the stage for more complex developments later in the year.

In Part 2, the focus will shift to mid-2008 developments, escalating financial stress, and how professional managers adapted their EUR/USD strategies as conditions deteriorated.


Summary:

Forex Managed Accounts update: Where the EUR/USD is heading in 2008! Why the USD weakened in 2007, where US Economy is going and how the US presidential elections may affect the financial markets!



Keywords:

Forex Managed Accounts,forex,economy,



Article Body:

The US dollar was the big story in 2007 � if you were selling it. Compared to 2001, the value of the dollar has gone down by 40 percent against the euro. And values at the beginning compared to the ending of 2007 were significantly down: the dollar was down about 13 percent versus the euro, 10 percent versus the yen, and 8.5 percent versus the pound sterling. Its value was at such a record low that supermodels and popular rappers made public their preference for getting paid in Euro, no dollars, please. The US dollar did stop skidding towards the end of 2007, but the question now becomes: has the dollar bottomed out or will the slide continue in 2008?


Why the Dollar Weakened in 2007


The dollar seemed so weak in 2007 because the rest of the global economy continued to grow even as US growth stalled, due in part to steady demand from the Middle East, China and India markets. Countries acted more independently, as illustrated by the Australian central bank�s decision to increase rates to stave off inflation at precisely the time the US Federal Reserve was cutting interest rates. Before December in fact, interest rate cuts happened only in the US. In short, some sort of decoupling occurred in the global economy, and this was a key factor to the strengthening of the other currencies and the weakening of the US dollar.


There are signs, as we begin 2008, that the phenomenon will no longer obtain this year and the global economy will again move more closely in step. In the latter half of 2007, economic growth in the UK and Canada slowed down indicating that the two countries were being weighed down by the weak US economy. In addition, the shock waves of the US subprime mortgage crisis have also shaken the financial markets of many countries, particularly the UK, where growth in the past years has depended on housing, mortgages, and the public sector. There are also signs of strain in the Eurozone, notwithstanding the ECB�s hawkish position on monetary policy. The pressure to reduce rates will increase if growth continues to weaken further in the US or in other countries. The pressure already forced the UK Bank of England to cut rates in December and more cuts are forecast for 2008.


Interest rate cuts will be the thing to watch in the currency market. The US Fed has already lowered interest rates 100bp in 2006 and another reduction will be more in line with expectations; but if the Eurozone begins to lower rates, this would be a significant departure from current policy, which could signal a major change in the outlook for the euro.


Where US Economy Is Going


The big question is whether or not the US economy is going into a recession, which would seriously impact global growth. Majority of the American public thinks the economy is already in recession, according to polls released in December. Public perceptions notwithstanding, economists think otherwise. A Business Week survey on 54 economists in December showed that the group believes the country will reflect a 2.1 percent growth by the end of 2008 (it registered 2.6 percent growth in 2007). They believe that although the first half of 2008 will be difficult, consumer spending will not stop, albeit more restrained. Fundamentally, the forecast of no recession rests on the assumption that the Federal Reserve will continue its round of rate cuts. Although financial losses in the subprime sector will continue, consumer confidence will depend largely on the Federal Reserves actions to support economic recovery.