Euro dives vs dollar. How to lock in?

And when it hits 1 to 1 and you are locked in at $1.12?

On one of my typical 2 week trips only 50% of my costs are incurred while on the road (hotels and air fare are paid in advance in dollars or what ever rate I get at booking time). So a 10% swing in the exchange only adds or subtracts 5% from the cost of the trip (maybe $200) When things get so tight that I can't compensate for that then I will stay home.

I understand that I would be trading the possibility of upside (Euro falling more). However, I'm less worried about feeling bad that the Euro will lose more value and I locked in at 1.10. What I'd like to do is limit my downside risk of the Euro gaining value. If you check the value of the Euro last year, it was 1.36. That's 20% more in costs. Although my airfare is locked, my apartment rentals, food, transportation, and entertainment are not. I used award miles, so 95% of my costs will be incurred when I arrive in Italy.

Maybe I will hedge and invest some money in the Euro via an ETF...that way, if the Euro rises sharply, my investments will go up...and if it goes down, well...at least my vacation will be cheap!

http://www.investopedia.com/ask/answers/06/currencyfuturesandspotfx.asp

A currency futures contract is a legally binding contract that
obligates the two parties involved to trade a particular amount of a
currency pair at a predetermined price (the stated exchange rate) at
some point in the future. Assuming that the seller does not
prematurely close out the position, he or she can either own the
currency at the time the future is written, or may "gamble" that the
currency will be cheaper in the spot market some time before the
settlement date.

With the spot FX, the underlying currencies are physically exchanged
following the settlement date. In general, any spot market involves
the actual exchange of the underlying asset; this is most common in
commodities markets. For example, whenever someone goes to a bank to
exchange currencies, that person is participating in the forex spot
market.

The main difference between currency futures and spot FX is when the
trading price is determined and when the physical exchange of the
currency pair takes place. With currency futures, the price is
determined when the contract is signed and the currency pair is
exchanged on the delivery date, which is usually some time in the
distant future. In the spot FX, the price is also determined at the
point of trade, but the physical exchange of the currency pair takes
place right at the point of trade or within a short period of time
thereafter. However, it is important to note that most participants in
the futures markets are speculators who usually close out their
positions before the date of settlement and, therefore, most contracts
do not tend to last until the date of delivery.

Here's how:
http://www.investopedia.com/university/forexmarket/

The forex market provides plenty of opportunity for investors. However, in order to be successful, a currency trader has to understand the basics behind currency movements.

Alternative to trading currency futures is to buy an Euro ETF FXE. See:
http://finance.yahoo.com/q/pr?s=FXE+Profile

Fund Summary The investment objective of the Trust is for the Shares
to reflect the price in USD of the Euro. The Shares are intended to
provide institutional and retail investors with a simple,
cost-effective means of gaining investment benefits similar to those
of holding euro.

i have a feeling in 2016 that the dollar will still be weak against the euro . . . 25% fall in previous six months to March, and Euro economy showing no signs (except for Germany) of picking up steam any time soon . . . politicians too unwilling to take the unpopular decisions necessary to shore up their/our weak economies.

of course if I (or anyone) really knew how to predict these things, one could easily make money off of forex trading. But since no one yet has found that crystal ball, it's all down to chance and a bit of luck.

(p.s. someone else might argue that 1.10 is high, as it was lower than that just a few weeks ago.)

It was .89 to the dollar at its debut in Jan. 2002 and dipped to .85 within the month. So if you can figure it out, please let us know.

I would take the rate at $1.12 even if it should dip to $1. It is still better than $1.28, let alone $1.38 when I was over last May.

Currency investing is highly specialized and I'd leave it to the professional speculators. It worked great for George Soros, but for each winner there must be one or more losers. I'm used to a Euro in the $1.25-1.40 range so today's rates are wonderful. As Kim points out, they were a few cents below $1.10 earlier this year and could drop again.

The bad news, of course, is that many Europeans are in or near recession, with high unemployment. Our next destination, Greece, is in some of the worst trouble. We wouldn't object to low-priced meals and hotels, but I can't be happy about the exchange rate when I think of all the people losing jobs, pensions, and hope. Plus it's not good for US exports either.

If I were you I'd just plan and anticipate my vacation and not worry about what the exchange rate will be almost a year from now. But you're you and it's your choice. Good luck!