The types of information necessary to forecast the euro/U.S. dollar currency pair includes actions taken and economic indicators monitored by the respective central banks. Among these indicators are inflation, employment, growth, production and geopolitics.
The central bank in the U.S. is the Federal Reserve. In Europe, it's the European Central Bank. These institutions influence the value of their respective currencies, so knowing what they are planning and how their decisions impact the euro/U.S. dollar is an effective means of forecasting its direction.
The role of central banks is to help maintain vibrant economies and foster the economic well-being of nations through their respective monetary policies. For example, the U.S. Federal Reserve has a dual mandate to stabilize prices and keep unemployment relatively low.
To maintain inflation between 2 to 3 percent annually and keep unemployment at around 5 percent, the Federal Reserve might buy or sell treasuries, adjust interest rates, or establish new reserve requirements. Such decisions are announced in public policy statements scheduled at regular intervals.
Since these decisions affect the value of the euro in relation to the U.S. dollar, they must be monitored by referring to the economic calendars provided by sites such as Forex Factory and Markets.
The central banks typically focus on only one or two economic indicators at a time. Euro/U.S. dollar forecasters should therefore watch these indicators and read articles that elaborate on the central banks' statements at sites such as Bloomberg.