In this article, we will cover some important facts about the world’s most traded FX pair: the EUR/USD. Learn what makes the EUR/USD go up or down in value.
What does EUR/USD mean?
The term EUR/USD (EURUSD) refers to a comparison of the value of the euro, the shared currency of the Eurozone, to the value of the United States dollar, in terms of how many dollars it takes to purchase one euro. For example, when the “Euro”, as the pair is commonly known, is trading at 1.50, it would cost one Dollar and fifty cents to buy one Euro.
In the EUR/USD pair, the Euro is the base or transaction currency, and the Dollar is the counter currency or quote currency. In traditional Forex, you buy and sell the base currency and the counter currency at the same time. So, when you go long on the EUR/USD, you are buying the euro at the same time as you are selling the dollar. And when you go short on the EUR/USD, you are selling the Euro as you buy the dollar.
What makes the Euro rise or fall against the Dollar
The EUR/USD currency pair is one way to compare the strength of the EU’s economy to that of the U.S. economy, because anything that affects either or both of these economies can make the EUR/USD rise or fall. It may be helpful to look at an economic calendar to keep track of significant economic events in Europe or the U.S.
Some common events that can have an effect on the Forex pair include the release of unemployment data in the U.S., or in the member countries of the EU. Interest rate and Treasury yield updates from the Federal Reserve or the European Central Bank can also cause the EUR/USD to fluctuate.
From time to time, any EU Government policy moves and decisions that could have an effect on the Euro, may cause the value of the EUR/USD to rise, while moves and decisions that make the Dollar stronger may cause the value of the EUR/USD to fall. Alternatively, a weakened Euro can negatively impact the currency pair, while a weakened dollar may cause the pair to climb.
Another factor that can affect the Forex pair is geopolitical uncertainty. The U.S. and the EU are major trading partners, and traders often pay attention to the relationships between the blocs when tracking currency prices. Instability can have a significant impact on the value of the EUR/USD.
Finally, because the U.S. and EU economies are heavily dependent on private industry, even the performance of the major regional stock indexes in the U.S. or Europe can cause the Euro to rise or fall against the dollar.
Currency trading offers substantial opportunities for those looking to trade CFDs.
In CFD trading, your profit (or loss) is determined by reference to the price movement of the currency pair. You are not buying or selling the underlying asset.
However, it is essential for traders to be able to determine what factors can lead to price movements in the EUR/USD when trading this Forex pair. Keeping track of international events and understanding their implications can be an important advantage when trading this and other major Forex pairs.
FAQs
The Currency Pair EUR/USD is the shortened term for the euro against U.S. dollar pair, or cross for the currencies of the European Union (EU) and the United States (USD). The currency pair indicates how many U.S. dollars (the quote currency) are needed to purchase one euro (the base currency).
What is the EUR USD pair in forex? ›
EUR/USD is the forex ticker that tells traders how many US Dollars are needed to buy a Euro. The Euro-Dollar pair is popular with traders because its constituents represent the two largest and most influential economies in the world.
What forex pairs correlate with Eurusd? ›
EUR/USD and GBP/USD are positively correlated forex pairs, with an increase or decrease in one often seeing an equal increase of decrease in the other.
What makes the EUR/USD move? ›
The EUR/USD exchange rate is constantly moving to reflect the latest economic data releases, central banks' policy announcements, investor sentiment, and other factors affecting the rate. Trading hours. Foreign exchange markets are open 24 hours a day, giving you more flexibility in when to trade the pair.
What are USD pairs in forex? ›
There are seven of them: EUR/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, AUD/USD, and NZD/USD. What are the currency crosses? Currency crosses (“crosses”) are the more frequently traded currencies that do NOT include the U.S. dollar in their pairing. Crosses include EUR/GBP, EUR/CAD, GBP/JPY, EUR/CHF, EUR/JPY, etc.
What are the 4 major forex pairs? ›
The major currency pairs on the forex market are the EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The four major currency pairs are some of the most actively traded pairs in the world, along with the so-called commodity currency pairs: USD/CAD, AUD/USD, and NZD/USD.
What is the best time to day trade the EUR USD forex pair? ›
The popular time to trade EUR/USD is when European and US trading sessions overlap. It often trades with the highest liquidity and volatility between 1pm and 4pm GMT. Economics, geopolitics and central banks all move EUR/USD.
What is the euro USD pairing? ›
Trading the EUR/USD currency pair is also known as trading the "euro." The value of the EUR/USD pair is quoted as 1 euro per x U.S. dollars. For example, if the pair is trading at 1.50, it means it takes 1.5 U.S. dollars to buy 1 euro.
What is the difference between EUR USD and Eurusd? ›
While most currency pairs that quote the dollar list the dollar as the numerator or base currency, EUR/USD has the euro first and the reason is mostly due to convention. The euro was introduced as an accounting currency in 1999 and is the second most active currency behind the U.S. dollar.
Do xauusd and eurusd correlate? ›
EURUSD and XAUUSD (Gold): The moderate positive correlation indicates that EURUSD and the price of gold (XAUUSD) tend to move somewhat in sync at various time intervals.
List of Top 10 Stable Currency Pairs
- EUR/USD. The EUR/USD currency pair takes the largest portion of the overall trading volume. ...
- GBP/USD. GBP/USD is another heavily traded currency pair. ...
- USD/JPY. USD/JPY is the second most traded currency pair. ...
- USD/CAD. ...
- AUD/USD. ...
- USD/CNY. ...
- USD/CHF. ...
- GBP/JPY.
Does Eurusd and Usdjpy correlate? ›
Negative Correlation: The USD/JPY is negatively correlated with other currency pairs such as the eur/usd and GBP/USD. This means that when the USD/JPY is trending higher, the EUR/USD and GBP/USD tend to move in the opposite direction.
What is the EUR USD winning strategy? ›
Range Trading: Range trading involves identifying areas of support and resistance within which EUR/USD fluctuates. Traders employing this strategy will buy near support levels and sell near resistance levels, aiming to profit from the price oscillations within the range.
What is the best indicator for Eurusd? ›
Top 10 Trading Indicators
- Moving Averages (MA) ...
- Average True Range (ATR) ...
- Stochastic oscillator. ...
- Moving average convergence divergence (MACD) ...
- Bollinger bands (BB) ...
- Relative Strength Index (RSI) ...
- Fibonacci retracement. ...
- Ichimoku Cloud.
What affects USD EUR? ›
Factors that impact the Dollar side of Euro to Dollar:
U.S. Gross Domestic Product (GDP) growth rates. Interest rates set by the Federal Reserve (the “Fed”) Money supply set by the Fed.
What is the most predictable forex pair? ›
Beginners might find the AUD/USD pair to be an excellent choice, since it is more predictable and less likely to spike or drop suddenly. In many studies, this pair has also been cited as one of the least volatile. In conclusion, the best currency pairs to trade for beginners are EUR/USD, GBP/USD, USD/JPY.
Which forex pair is most profitable? ›
Frequently Asked Questions About Forex Currency Pairs
The EUR / USD is actually the best currency to trade, its the most liquid and cheap to trade and most of the moves are quite logical in a way, the EURUSD currency pair often has a negative correlation with USD / CHF and a positive correlation with GBP / USD.
What is the EUR USD trading pair? ›
The value of the EURUSD pair is quoted as 1 EUR per x USD. For example, if the pair is trading at 1.50, it means it takes 1.5 USD to buy 1 EUR. What is EURUSD volatility? The term volatility describes the risk related to the changes in an asset's value.
What is the hardest forex pair to trade? ›
The 10 most volatile forex pairs (USD)
- USD/ZAR - Volatility: 12.9% ...
- AUD/USD - Volatility: 9.6% ...
- NZD/USD - Volatility: 9.5% ...
- USD/MXN - Volatility: 9.2% ...
- GBP/USD - Volatility: 7.7% ...
- USD/JPY - Volatility: 7.6% ...
- USD/CHF - Volatility: 6.7% ...
- EUR/USD - Volatility: 6.6%
What are the most choppy forex pairs? ›
Most volatile currency pairs
Currency pair | Daily % change | Daily pip variation |
---|
NZD/JPY | 0.91% | 79.979 |
AUD/CHF | 0.82% | 46.532 |
CAD/JPY | 0.82% | 89.815 |
GBP/JPY | 0.81% | 147.679 |
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The most popular currency pairs traded in the forex market include the following:
- EUR/USD (Euro/US dollar)
- USD/JPY (US dollar/Japanese yen)
- GBP/USD (British pound/US dollar)
- AUD/USD (Australian dollar/US dollar)
- USD/CHF (US dollar/Swiss franc)
- USD/CAD (US dollar/Canadian dollar)
Is Eurusd good for scalping? ›
The optimal Forex trading pairs for scalping and securing modest profits are typically the major currency pairs such as EUR/USD, USD/JPY, GBP/USD, and AUD/USD. These pairs tend to have high liquidity and low spreads, making them ideal for short-term trading strategies like scalping.
How many pips does Eurusd move daily? ›
On average, the EUR/USD pair has a daily pip movement of approximately 70-100 pips. This pair typically exhibits an average monthly pip movement of around 600-900 pips.
What is the most profitable time to trade forex? ›
The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.
Is Eurusd the best pair? ›
EUR/USD is the most traded currency pair on the market, with EUR/USD transactions making up 24.0% of daily forex trades in 2019. The popularity of the EUR/USD pair comes from the fact that it is representative of the world's two biggest economies: the European single market and the US.
What does it mean to sell the EUR USD? ›
Sell Position: If you think the value of the base currency will decrease compared to the quote currency, you'd take a Sell position. So, for EUR/USD, taking a Sell position means you believe the price of EUR will weaken against USD (or USD will strengthen against EUR).
What time is EUR USD forex trading? ›
EUR/USD Trading Hours
Week day | Trading hours (CET) |
---|
Monday | 00:00 — 23:00, 23:15 — 24:00 |
Tuesday | 00:00 — 23:00, 23:15 — 24:00 |
Wednesday | 00:00 — 23:00, 23:15 — 24:00 |
Thursday | 00:00 — 23:00, 23:15 — 24:00 |
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How to read EUR USD chart? ›
The EUR/USD bar chart consists of a series of bars. Each bar's vertical line expresses the difference between the pair's high and low price for the selected time frame, while a horizontal bar to the left denotes the instrument's opening price and a horizontal bar to the right points to the pair's closing price.