The EUR/USD pair is the most popular of the major pairs. People like it because they can make money from it.
So, with historical data downloads just a few clicks away and spreads all over the internet, intraday traders have plenty of access to the information they need.
When you trade, there are other currencies to care about. You may see a currency in many different pairs. That's because all the currencies are linked together and they trade with each other.
Relationships that are always in the same direction are called positive correlations. Relationships that go in opposite directions are called negative correlations.
Positive correlation When money pairs react in the same way, they are positively correlated. Most popular money pairs are GBP/USD, AUD/USD, and EUR/USD. This is because USD is the counter currency. Whenever there's a change in US dollar, it will also affect all of these pairs.
Negative correlation This is when currency pairs move in the opposite direction. Popular pairs include USD/CHF, USD/JPY, and USD/CAD. The counter to these major currencies is the US dollar because that's what they use to measure it.
The EUR/USD related index that we look at today will have been shaped in part by the US dollar's unique role over the years. Here are some reasons why it has grown to become the world’s most important currency:
The U.S. dollar is the world's reserve currency. It is used to settle most international transactions. Many countries will keep a lot of their money in US dollars. Countries and banks often keep US dollars. Prices for things like gold are often set in US dollars. OPEC also trades in US dollars. You need to know what drives the US economy. That way you can predict where the US dollar will go. It is most featured in popular pairs like USD/JPY and EUR/USD, so you need to know that too.
The European Union is the biggest economic region. Its total GDP is about $18.3 trillion in 2018. What some people do not know when they look at their EUR/USD live chart, is that the euro’s growth comes mostly from services and manufacturing. As such, when economic activity slows down in the European Union, the euro will also go down.
Although the European Union is made up of several member states, it has only one central bank and one currency. The euro was used to replace local currencies in the eurozone countries. This meant that there were no exchange rates or transaction fees involved when trading goods or services between these countries.
The euro is also used in some other countries outside of the European Union like Kosovo, Montenegro, and Andorra.
The euro is a unique currency because it is used in 19 of the 28 countries in the EU. Every day, 400 million people buy and sell with euros. As the popularity of the euro has grown, so have economic and political events in Europe. To be a successful FX trader, you need to pay attention to both the US dollar and the euro.
Bullish trends for this popular pair are often short-lived, so make sure you keep your stop losses tight! It is also important to know how volatility works before trading this pair. There are a few more things you need to know, so be sure to add them to your checklist of things that will help you trade the EUR/USD correctly every time.
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The Currency Pair EUR/USD is the euro against the U.S. dollar (or how many U.S. dollars are needed to buy 1 euro). The value of the EUR/USD pair is often quoted as 1 euro per x U.S. dollars, which means that if it takes 1 Euro to buy $1, then it would take 2 Euros to buy $2, 50 Euros to buy $50... But if you look at the quote currency and base currency, this is actually based on how much more expensive one country's money is compared to another's money in terms of what they have in common - so for example, if your home country has a lot more food or gas than another one because its population needs it, then your country's money is more expensive than the others (because you need to pay for that food and gas). If it didn't, then your currency would be less.
Currencies of countries that have a lot of goods and services like the EU and US are considered more valued than other currencies because they need more of them than other countries.
You ideally want to day trade the EUR/USD between 1300 and 1600 GMT to maximize efficiency. During this period, you'll see the biggest moves of the day, which means greater profit potential, and the spread and commissions will have the least impact relative to potential profit.
If you're buying the EUR/USD, you believe the price of the euro will strengthen against the dollar. The base currency will fall compared to the quote currency. If you're selling the EUR/USD, you believe the price of the euro will weaken against the dollar.
The EURUSD almost always guarantees volatility at all times due to the many factors that impact on its price and can offer great trading opportunities for investors. The EURUSD offers traders the arguably the easiest way to profit using fundamentals or fundamental analysis.
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