Research On The Prediction Method Of The Exchange Rate Of The Euro Against The Dollar

Euro,as the settlement of the whole Europe countries,starts in 1999.It's harder to explain and predict the exchange rate fluctuations of Euro-dollar than the two currencies between two countries.In the past ten years,great progress has made in the research on exchange rate,great contributions has made in theoretical and empirical,which is determined by exchange rate with the development of Econometrics,and the obtained of high quality data,the empirical study of the prediction and analysis of exchange rate.According to time sequence,the essay descript from the beginning of the Breton Woods System to it's ending,then the determination theory of exchange rate in the 1990s.Parity theory?the interest rate parity theory?the theory of balance of payment?monetarism exchange rate theory?portfolio theory?microscopic analysis and chaotic analysis in the 1990s was described in detail.From the analysis on historical trend,reasons of different stages and the models it can be concluded that purchasing power parity doesn't apply to the research of the exchange rate,similarly,the shortcomings in the prediction of the monetary model,the news model and Bias model has been listed.Many scholars,use the random walk model to do the research,which contains no economic variables,and also use the Grainger Granger causality test to identify the long tern spreads between America and Euro zone is the reason why exchange rate volatility.That means,in Euro-Dollar exchange rate that the economic fundamentals contained in the economic fundamentals can't be ignored,which contained in traditional macroeconomic models of exchange rate.It can't be taken place by using a simple model random walk when the short-term prediction had a bad effect.By examining the results of the economic cycle,we find that inflation and money supply have impact on euro-dollar short-term exchange rate fluctuations.