All about Trading in the EUR/USD Currency Pair

The Euro and US Dollars have proved to be two of the most well-known and prominent currencies worldwide. This currency pair has the largest global trading volume and is the most predominantly traded among the investors. This pair is extremely volatile and has an unusual price movement. It is precisely why readers may find it difficult to trade on but never neglect the same.

Let us now take you through a little synopsis on the various angles connected to the euro-dollar trading strategies. In this article, we have brought to you the top factors that you need to consider before delving into the trading process.

What is the euro-dollar?

Before we take you through the different ways and factors driving the euro-dollar trading, we define the term euro-dollar and what that means.

• The US dollar (USD) and Euro (EUR) are the USA’s official currencies and the European Union Nations, respectively.
• While the Federal Open Market Committee (FOMC) determines the USA’s overall monetary policy, the same task is assigned to the European Central Bank (ECB) for Europe.
• Both these currencies have a tremendous impact on the Foreign Exchange Market (Forex).
• Currency pair is a term used when the price of one currency fluctuates concerning the other.
• The US dollar (USD) and Euro (EUR) also form a currency pair known as the Euro/Dollar or EUR-USD.
• It is currently the highest traded currency pair in the forex market.

What does the EUR-USD price change mean?

• The exchange rate for EUR/USD is on a constant change.
• It simply means that the exchange rate will directly impact the change in the prices of Euro.
• The exchange rate will simultaneously have a reverse effect on the prices of the Dollar.
• This means that if the exchange rate is higher than the previous day, the price of the Euro will increase, whereas that of USD will decrease.

The rise and fall of prices determine the strength of the currency. A rise in the euro-dollar pair could indicate that the Euro is getting stronger than the dollars. It also indicates that the Dollar is substantially getting weaker.

A brief history of the euro-dollar currency pair

The foreign exchange market in the late 90s showed a very different picture. During that time, you and the German Deutschmark were among the strongest currency pairs along with the French Franc and USD.

On 1st January 1999, the Euro came into existence and forever changed the course of currency conversion history. The journey was tantamount and opened up internal community members, including the European unit of account and European currency unit (ECU).

The most traded currency pair

According to a survey of the Central Bank in 2016, the US dollar (USD) is the most traded currency in the market currently. The Euro claims second place. At the same time, the USD takes about 87.6% of the current volume of trade, the euro shares at 31.4%. This indicates that the USD is at the leading front with a large daily share so far.