Eur usd forex 15

Ins and Outs of Trading the EUR/USD Currency Pair.

The US Dollar and the Euro are two of the most prominent and well-known currencies in the world. The Euro versus US Dollar (EUR/USD) currency pair has the largest global trading volume, meaning it is the world's most-traded currency pair. Whether you find the instrument easy or difficult to trade on, it's not a pair that many traders neglect, due to its daily volatility and price movement.

This article provides a detailed account of all the angles connected to Euro/Dollar trading, EUR vs USD strategies, Euro Dollar news, and much more. It will mention the top strategies that readers should consider, and the various factors and forces driving the price movement and direction.

In this article we are going to explain all the most relevant aspects on how to trade the euro-dollar Forex pair. We will review:

An introduction to the EURUSD, including its history Different ways to analyse the Forex pair Different trading styles for the Euro Dollar Trading strategies and currency correlations And the best platform and broker for trading.

What is the Euro Dollar?

Before we share how to invest in the Euro Dollar, let's define what the Euro Dollar is and what EUR / USD means.

The US Dollar (USD) and Euro (EUR) are official currencies of their respective economic zones in the US, and the nations within the European Union. The FOMC (Federal Open Market Committee) is a branch of the Federal Reserve (FED) that determines the direction of monetary policy for the US, which in turn impacts the value and perceived value of the US Dollar. The European Central Bank (ECB) is the main central bank for the Euro and the Euro zone, and has a similar impact on the Euro currency.

Both currencies are part of the Foreign Exchange (Forex) market. In the Forex market, the price of one currency moves up, down, or sideways versus another currency, which is referred to as a currency pair. The Euro (EUR) and the US Dollar (USD) form a currency pair which is known as the Euro/Dollar, EURUSD or EUR/USD. Both the EUR and the USD also form currency pairs with other currencies such as, the Euro versus the Great British Pound (EUR/GBP) or the US Dollar versus the Canadian Dollar (USD/CAD).

The Euro Dollar is the most-traded currency pair in the Forex market, and its value refers to the exchange rate of the euro against the US dollar. A EUR / USD price of 1.2 means that to buy one Euro (EUR) you must pay 1.2 US Dollars (USD). In other words, 1 Euro is equivalent to 1.2 Dollars.

The Euro Dollar can be used in real economy trading, but also as a financial instrument in the form of CFDs to speculate on the exchange rate between the Euro and the US Dollar.

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What the EURUSD price change means.

While the EUR/USD exchange rate is constantly changing, what does that mean in terms of the value of each of the currencies? Simply, when the exchange rate goes up, that means the value of the Euro has increased, while the value of the Dollar has decreased in comparison. When the exchange rate goes down, the opposite is true.

When the price of the Euro Dollar rises (for example from 1.15 to 1.17) the euro increases its value against the dollar. When the price of the Euro Dollar falls (for example from 1.22 to 1.19), the Euro loses value and the Dollar increases in value. If you were trading the USD/EUR rather than the EUR/USD, the opposite would happen. It is important to note that this version of the Forex pair is not very common.

When the price rises or falls, it tells us that one currency is becoming stronger or weaker than the other, or even both:

A rise in the Euro Dollar could mean that the Euro is getting stronger compared to the Dollar or It could mean that the Dollar is weakening.

Source: EURUSD, Daily Chart, MT5 Admirals. Data range: September 5, 2022 to March 26, 2022. Conducted on March 25, 2022. Please note that past performance is not a reliable indicator of future results.

As you can see in the chart above, the exchange rate of the EUR/USD was in a down trend until September 2022, meaning the Euro was weakening against the dollar (or the Dollar was strengthening against the Euro) throughout this period. From September 2022 until February 2022, the currency pair traded within a range from a low of about 1.0875 to a high of about 1.1240. February and March then saw extreme volatility due to the coronavirus pandemic.

Euro Dollar - The Most Traded Currency Pair.

The US Dollar (USD) is the world's most traded currency, and the Euro claims the second spot, according to a Central Bank Survey conducted in 2022. The USD takes a daily share of 87.6% of all currency related trade activity, which is 2.79 times as much as the Euro's share at 31.4%.

There are a couple of conclusions that can be considered:

The US Dollar's lead is enormous, the USD has the largest daily share by far It does not come as a surprise that the EUR/USD is a highly traded currency pair, as it incorporates the world's first and second highest valued currencies.

The rest of the top five Forex pairs are the Japanese Yen with a 21.6% share, Pound Sterling at 12.8%, and the Australian Dollar at 6.9%. The table below displays percentages for the entire top 10 currencies.

% daily share (April 2022)

United States dollar.

New Zealand dollar.

Source: Triennial Central Bank Survey Foreign exchange turnover in April 2022. Data range: 11 December 2022 - Retrieved 22 March 2022.

The currencies with a higher daily share are usually the most interesting currency pairs for traders, because price movement tends to be stronger and more regular from an intra-day and daily perspective when compared with less frequently traded currencies, which we will explore now. Most traders tend to stick to "major" currency pairs such as the EUR/USD, GBP/USD, USD/JPY, EUR/JPY, GBP/JPY , whereas some traders venture into lesser known currency crosses such as GBP/AUD, EUR/NZD, CAD/JPY.

The most popular however, is the Euro/Dollar. The "exotic" currency pairs, such as, Czech Crown (CZK) versus Mexican Peso (MXN/CZK) or CHF/JPY (Swiss Franc versus Japanese Yen) are often more difficult to trade due to lower volatility, and are not recommended for new traders.

Depicted: Admirals MT5 with MT5SE Add-on EUR/USD - Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Depicted: Admirals MT5 with MT5SE Add-on EUR/USD - Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

A Brief History of the Euro to Dollar Currency Pair.

The Forex market in the late 90s was significantly different from the way it is today. Back then, the German Deutschmark against the US dollar was one of the biggest currency pairs, along with the French Franc versus the US dollar.

It didn't take long before the course of currency conversion history changed. On 1 January 1999, the Euro came into existence. The journey leading to the euro began decades before. There were also earlier versions of Euro, in the form of internal accounting units for the European Community members:

The European unit of account The European currency unit (ECU)

These were not true currencies, however. Instead, they were baskets of certain EC currencies, designed to aid stability in European exchange rates. Thus, they helped pave the way for a single currency. The ECU basket of EC currencies had a slightly different composition to those that would comprise the Euro. Despite this difference in composition, the ECU played a crucial role in the historical exchange rate of the Euro. This is because the value of one Euro was set as the value of one ECU at its inception on 1 January 1999.

This made the original Euro Dollar exchange rate 1.1686. Though the Euro wouldn't become a physical currency until 2002, the Euro launch at the beginning of 1999 tied the ratio of these Eurozone currencies together. Thus, the French Franc, the German Deutschmark, the Spanish Peseta, the Italian Lira, etc., ceased to have separate, floating historical FX rates after this point.

Instead, they were effectively pegged to the value of the Euro until they were completely folded into the shared currency we know today. Many saw the Euro in its early days as a contender to usurp the Dollar's unofficial title as the global reserve currency. While this could still happen, the Dollar still retains its crown by some margin.

What has affected the history of EUR/USD?

While the short-term ebb and flow of the Euro to Dollar exchange rate can be influenced by a huge number of factors, the long-term performance of the currency pair has been driven by various fundamentals. Naturally, these are the same factors that affect exchange rates in general, no matter which FX pair you look at.

Two important factors that affect exchange rates in general are: the strength of the underlying economy, and monetary policy, which is implemented by the pertinent central bank. Of course, the latter is very much tied to the former. As the timeframes shorten, speculation starts to come into focus more and more. Therefore, expectations over central bank policy also have a major impact. If we look at the US Dollar to Euro exchange rate history, we can see some clear examples.

Many of these occurred after one of the biggest reductions in the Euro vs USD history: the global financial crisis that began in 2007. The stresses placed by this event on economies around the world forced a sequence of extraordinary responses from central banks. But here's a key part of the puzzle: the response wasn't uniform. The divergence in policy between the US Federal Reserve and the European Central Bank (ECB) in particular was pronounced.

How did they differ?

The Fed made early and aggressive moves to stimulate the US economy with three different tranches of quantitative easing (QE). In contrast, the ECB resisted QE for an extended period. When it finally began purchasing sovereign bonds as a stimulus measure, it was several years behind the FED.

Why did they differ?

The FED has a dual mandate:

To foster maximum employment To stabilise prices.

In contrast, the ECB's primary objective is solely price stability. This disparity in policy consequently led to some interesting effects on the Euro-Dollar exchange rate. In fact, for an extended period, the most important EUR/USD Forex news stories tended to be about FED stimulus. Another major issue facing the Euro was the Eurozone sovereign debt crisis. Certain member states had crippling amounts of national debt.

The uniform nature of monetary policy for the shared currency posed a thorny problem: you cannot tailor measures to the specific needs of different nations with a 'one-size-fits-all' monetary policy. This led to some questioning whether the single currency would even survive. Let's look at the specifics of the Euro against the Dollar over the period in question.

Here's a weekly EUR/USD chart dating back to 2007:

Source: EURUSD, Weekly Chart, MT5 Admirals. Data range: March 19, 2006 to March 30, 2022. Taken on March 30, 2022. Please note that past performance is not a reliable indicator of future results.

Some of the key events for the period are marked on the chart above, so that we can see how they affected the Dollar Euro exchange rate history.

Euro Dollar Exchange Rate History Since 2007.

The most significant events in EUR/USD history are as follows: