Forex Trading the EUR/USD Pair € EURO and $ US Dollar

Submitted by Share Trading on 26 August, 2017 - 10:22

Thanks to modern technology and air travel, our world is a lot smaller and as you travel, you exchange your money for another currency which results in a difference in value. How can there be such a difference in value between one currency and another, and is it possible to profit from the difference…Hi, I'm James and I like you to join me as we discover trading.

Today we are talking about probably the most trading currency on the forex market which is the EURO versus the USD. We hope that by the end of this video, you will have a better understanding of what to look for when you look to trade this currency pair. So, what makes the differences in value between the EURO (€) and the USD ($)?

The answer often is, it is the strength or perceived strength of that country’s economy which that bank note represents. So, why is the Euro Dollar so popular with traders?

Europe and United states, the two largest economy in the world, although the USD still remains the number one reserve currency , Euro dramatic rise to prominence has made it the world second most common reserved currency. So, what do you need to be aware of when trading this pair?

EUR/USD Trading Active Session Times

First, it’s a good idea to learn the time periods that can affect the pair. Though the Euro and dollars can be traded 24 hours a day, Mondays to Fridays. It’s best to be aware of the two busiest sessions. The London section and New York section.

London Opens from 3AM Eastern Standard Time (EST). Now this is the world's largest affix central bringing in a massive volumes to the market, then the cross over happens when New York opens for market at 8AM (EST) which may cause a lot of volatility. When London closes at 12PM (EST) the activities starts to drop as volumes decrease. In fact, the average pips moments for a trading session through the EURO is as follows;

  • For the New York session, its 92 pips
  • 76 pips during the Tokyo session
  • 114 pips in the London session.

Now as we said, Europe and the United States are the two largest economies in the world so it is a good idea therefore to be aware of interest disparities between the European Central Bank (ECB) and the US Central Bank (FED) as it can bring movement to the pair. If you have intervention for one of the central banks, it can weaken related currency against the other. As we also said, its often dependent on the perceived strength of those countries economy, in the case of the Euro's own, ‘The BLOCK ECONOMY' so, it’s a good idea to be aware of the relevant events occurring to the 16 countries which make up the EURO zone such as the events which occurred recently in Italy and Greece.

EURO Currency Economic Influences

When it comes to EURO Zone, it’s important to keep an eye on the foreign economic indicators coming out from Germany as Germany is the biggest economy in Europe;

  • Real GDP
  • Industrial production
  • Unemployment Rate
  • ZEW Indicator of Economic Sentiments.

At the same time, you need of course to be aware of the economic indicators being released from the United States, others which can be found on the Financial Calendar.

Be aware that unlike the USD which is known as the Safe Heaven, EURO is seen as a riskier asset, so you need to asses that the market sentiments is indeed 'Risk On' or 'Risk Off'.

Because of this, you may also notice that the US Dollar collated in a negative way to the dollar of Swiss Franc as the Franc is known as another safe heaven, while the relationship of the Pound and Dollar is one of a positive manner.

In summary, here are the things you need to be aware of when looking to trade the Euro or Dollar;

  • Trading Time: It presents the most volatility
  • Interest rates and policies from the ECB and the FED.
  • Headlines relating to the EUROZONE block
  • Economic indicators from the EURO Zone, US and Germany. Market Sentiments, is there a risk appetite?

Now, thanks for watching, I hope you find this video informative. Join me next time when we take a look at the S&P 500. Till then, YOU TRADE SAFE! - start trading today!

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