In the world today, eur usd trading is the most prominent currencies to trade.
The eur usd currency pair is the largest in the global trading volume. Because of that, it’s the most traded pair of currency.
It doesn’t matter if you find the eur usd trading difficult or easy. This currency is not one that many traders neglect, even with its volatility.
Key Factors for Trading the eur usd Currency Pair
Anyone who wants to trade the eur usd currency pair successfully should take a look at some of these critical strategies and factors for trading the eur usd currency pair.
So let’s get down to business……
Sessions
The first key factor to consider is sessions. As a trader, knowing the eur usd trading time is essential in determining when the pair is volatile.
Usually, eur usd trading time the same with Asian sessions. And because of these, most of the essential events and economic data are released during these sessions.
During noon activities slow down, this is because most traders will be going to have lunch, and when the US trading session begins, movements rise again.
Once it 5:00 GMT, liquidity slowly leaves the market again, and by then, traders in Europe are already closing their positions.
Personalities and Instructions
Another key strategy that can be beneficial to you when trading eur usd currency pair is instructions like the central bank of Europe and the US.
The US Federal Reserve and the European Central Bank (ECB) regulate the interest rates, money supply, monetary policy, and the strength or weakness of the euro and usd.
As a result of these, the market follows it’s affected by any speech the central bank president makes and meeting that happens there.
These create the eur usd volatility in the forex market. So you must watch out for it.
Political Instability
Any political issue can positive or negativity affect your euro and usd trade.
For instance, Brexit in the UK and other European countries, and any other form of a political event that may come up in Europe or the US.
Another example is when a politician makes a claim. Like when the US Treasury secretary said that “a weaker dollar is good for the US.”
This statement resulted in the immediate fall of the USD. So always keep an eye on political events when trading in this currency pair
Interest Rate
The interest rate is significant in determining the strategy to use when we trade in these two currencies.
These because, according to most economic theories, there is always a correlation between the exchange rate and interest rate. And this is known as the international fisher effect.
And believe it or not, it is always the case most times. Currencies still rise and fall, depending on the interest rates of the economy.
For instance, when the eurozone interest rates are higher than the dollar, it makes the dollar weak. But when the US interest rate is higher, these weaken the euro.
Conclusion
It’s essential to know that in the forex market, the eur usd pair is the leading pair at the forex market because it represents the major economies.
If, as a trader, you want to be successful in euro and usd trade, then you should put into consideration the key strategies and factors for trading eur usd.