Currency Euro and US Dollar are the 2 largest currencies in the world, which also reflects the 2 biggest economic / trading blocs. Many multinational companies open branches / headquarters in America and Europe. The company has a need to limit the loss of their profits due to the difference in exchange rates between the two regions. Also, some international finance firms also open offices in these two areas. The firm is also actively involved in trading the currency of the euro and the US dollar.
And since the euro and the US dollar are the most popular currencies, opportunities that use value stability between two currencies are virtually impossible to find. But still the forex traders make this pair as the main reference. As the most-traded pair (both in the relationships between countries & companies, as well as in forex), the pair offers very small spreads and constant capacity for traders. 2 things are very important for the speculators and helped boost the popularity of this pair. In addition, the large number of participants in this pair trade and the information flow from almost never-ending economic data provide an opportunity for traders to constantly formulate and re-examine the positions they open in the forex market. Activity is very active makes the pair becomes very unstable, which led to the birth of many opportunities to reap the benefits. In other words, traders have a greater chance to practice their trading skills in this pair.
The latest data from the Bank for International Settlements (BIS) reveals that the trading amount of the EUR / USD pair is recorded at 23% of the total daily trading amount in the forex market. The volume has actually fallen from the results in 2013, which indicates that there is a decrease in the trader's interest in this pair. Still, the amount is still high.
Characteristics of EURUSD pair
Spreads from forex brokers (on average): 0-2 pip;
Daily range (average): 90-100 pips;
Best trading time: London Session and New York Session (2pm - 3am).
EURUSD tends to be negatively correlated (move in opposite direction) with USD / CHF pair and positive correlate (move unidirectional) with GBP / USD pair.
Factors affecting the movement of EUR / USD pair
The main factor affecting the movement of this pair is the (relatively) economic strength of 2 blocks (America and Europe). Assuming other indicators are in neutral condition (without sentiment), economic growth in the US will strengthen the dollar so that its value increases compared with the Euro, and Economic growth for the EU will show the opposite result. One sign that reflects the economic strength is the level / interest rate. When the US interest rate determined by the Fed is higher than the interest rate in Europe, then generally we will find the strengthening of the value of US Dollar. Vice versa, if the value of interest rates in Europe is higher, then the Euro will strengthen.
Another factor that contributes strongly in the movement of the value of Euro and US Dollar is the political conditions in countries that are members of the European Union. The Euro currency, introduced in 1999, can be said to be a relatively new currency when compared to other major currencies. Many economic analysts see the Eurozone as the subject of tests in economic and monetary policy. And when EU member states begin to cooperate with each other, there will be friction-friction between members. If the friction ends in conflict and looks massive or has the potential to shake the stability of the Eurozone, then the US Dollar will strengthen against the Euro.
In general, the factors that can influence the movement of EURUSD pair directly are:
Interest rates, policies and statements taken by the ECB (European Central Bank) / European Central Bank;
Interest rates, policies and statements taken by the Fed / US central bank;
Economic and political issues in EU member states;
Economic and political issues in the United States;
The price of crude oil (which affects the value of the US dollar).
And since the euro and the US dollar are the most popular currencies, opportunities that use value stability between two currencies are virtually impossible to find. But still the forex traders make this pair as the main reference. As the most-traded pair (both in the relationships between countries & companies, as well as in forex), the pair offers very small spreads and constant capacity for traders. 2 things are very important for the speculators and helped boost the popularity of this pair. In addition, the large number of participants in this pair trade and the information flow from almost never-ending economic data provide an opportunity for traders to constantly formulate and re-examine the positions they open in the forex market. Activity is very active makes the pair becomes very unstable, which led to the birth of many opportunities to reap the benefits. In other words, traders have a greater chance to practice their trading skills in this pair.
The latest data from the Bank for International Settlements (BIS) reveals that the trading amount of the EUR / USD pair is recorded at 23% of the total daily trading amount in the forex market. The volume has actually fallen from the results in 2013, which indicates that there is a decrease in the trader's interest in this pair. Still, the amount is still high.
Characteristics of EURUSD pair
Spreads from forex brokers (on average): 0-2 pip;
Daily range (average): 90-100 pips;
Best trading time: London Session and New York Session (2pm - 3am).
EURUSD tends to be negatively correlated (move in opposite direction) with USD / CHF pair and positive correlate (move unidirectional) with GBP / USD pair.
Factors affecting the movement of EUR / USD pair
The main factor affecting the movement of this pair is the (relatively) economic strength of 2 blocks (America and Europe). Assuming other indicators are in neutral condition (without sentiment), economic growth in the US will strengthen the dollar so that its value increases compared with the Euro, and Economic growth for the EU will show the opposite result. One sign that reflects the economic strength is the level / interest rate. When the US interest rate determined by the Fed is higher than the interest rate in Europe, then generally we will find the strengthening of the value of US Dollar. Vice versa, if the value of interest rates in Europe is higher, then the Euro will strengthen.
Another factor that contributes strongly in the movement of the value of Euro and US Dollar is the political conditions in countries that are members of the European Union. The Euro currency, introduced in 1999, can be said to be a relatively new currency when compared to other major currencies. Many economic analysts see the Eurozone as the subject of tests in economic and monetary policy. And when EU member states begin to cooperate with each other, there will be friction-friction between members. If the friction ends in conflict and looks massive or has the potential to shake the stability of the Eurozone, then the US Dollar will strengthen against the Euro.
In general, the factors that can influence the movement of EURUSD pair directly are:
Interest rates, policies and statements taken by the ECB (European Central Bank) / European Central Bank;
Interest rates, policies and statements taken by the Fed / US central bank;
Economic and political issues in EU member states;
Economic and political issues in the United States;
The price of crude oil (which affects the value of the US dollar).
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