Everything you need to know to start trading EUR/USD on Forex is in this guide. Choose from the list of the best EUR/USD brokers the broker that best suits your needs and trade safely.
Regulated Brokers for EUR/USD trading
- 1 Regulated Brokers for EUR/USD trading
- 2 The EUR/USD currency pair on Forex
- 3 Real-time EuroDollar Quote
- 4 Factors influencing the EUR/USD exchange rate
- 5 Which organisations set the EUR/USD rates?
- 6 How to trade the EUR/USD
- 7 Technical analysis of EUR/USD
- 8 In brief: Trading the EUR/USD pair
The EUR/USD currency pair on Forex
If you have ever wondered what eur/usd means, it is a currency pair made up of the Euro and the US Dollar. The EUR/USD or euro dollar is the world’s most popular currency pair for Forex trading, so it is obviously one of the major currency pairs.
According to statistics provided by the BIS (Bank of International Settlements), in 2016, US dollar transactions averaged more than four billion dollars per day. The euro, on the other hand, reached 1.5 billion dollars per day on the OTC Forex market.
The main reason why the eur vs usd currency pair is one of the most popular among Forex traders is that the two areas are among the most powerful economies in the world. In addition, all multinational companies do business in these two currencies, making them the most widely used currencies in the world. On the other hand, this carries a risk for the aforementioned corporations as the exchange rate is volatile and depends on various factors.
In addition, Forex brokers often offer low spreads on the EUR/USD, which makes it even more attractive to retail traders, who are those who trade on a small scale or trade on a limited value basis.
Real-time EuroDollar Quote
In order to succeed in Forex trading, it is essential to keep abreast of changes in the exchange rates of the various currencies. For this purpose, charts are used to consult the euro/dollar exchange rate in real time.
On these charts you will often find different options to view the performance of the EUR/USD. Traders use charts to decide their trading strategy. But this is not enough, so technical analysis of the currency pairs you want to trade is often carried out.
Factors influencing the EUR/USD exchange rate
The factors affecting the EUR/USD are many and varied, as they include both local and international factors. Roughly put, any event that can affect the price of one of these currencies will immediately affect the pair as well.
Among the factors that can affect the Euro, the most prominent are: changes in the Eurozone, the decisions of the European Central Bank, the Euribor, the Cross Rate Effect, the 10-year Government Bonds or other political factors.
As for the USD, it can be affected by decisions taken by the Federal Reserve Bank, the US Treasury Department or the FOMC, interest rates, the Discount Rate, 30-year Treasury Bonds, the Cross Rate Effect or the Equity Markets.
For example, Brexit negatively affected the value of the Euro and not just sterling and some of the policies planned by the Trump Administration could affect the value of the US dollar if implemented.
Which organisations set the EUR/USD rates?
The central banks are the ones that set and update the interest rates of the currencies. For the Euro, it is the ECB or European Central Bank, which is in charge of the rate, while for the US dollar, it is the FED or Federal Reserve which is in charge.
How to trade the EUR/USD
Trading the Euro/Dollar currency pair is relatively easy by following the simple guidelines below:
1. Know the main indicators:
Particularly difficult is the case of the Euro, as these indicators will emanate from all Eurozone countries. That said, statistically, the indices linked to the US will have the greatest influence on EUR/USD quotes.
2. Keeping abreast of international developments
This is an arduous task that will require a great deal of time and effort due to the large number of indicators to follow. In order to trade correctly, no trader can forget to follow financial news and forecasts.
3. Follow the Master Rate or Interest Rate
This is done in a simple way. You simply have to keep abreast of the communiqués of the different bodies in charge of this regulation. These are the European Central Bank and the US Federal Reserve.
While predicting the behaviour of financial markets in the short term is practically impossible, a correct analysis of these factors will help to forecast movements in the medium and long term. By correctly trading the eur vs usd pair, we can make a significant profit.
Trading Eur/Usd through a CFD broker is the most popular way for small and medium sized investors to trade Eur/Usd. In our list of the best EUR/USD brokers you will find only regulated brokers, as it is important to make sure that you trade on reliable platforms.
CFDs are complex products and leverage can multiply potential losses.
Technical analysis of EUR/USD
An important part of any EUR/USD trading strategy is reliable technical analysis. As a general rule, a country with a strong currency will benefit from imports, with exports being its weakest point. On the other hand, a country with a weaker currency will benefit from exports of goods and will be weaker on imports.
To carry out the technical analysis of the euro/dollar we will look at a series of graphs, made from the analysis of all the variables to be taken into account when calculating the price of these two currencies. In them we will be able to see almost in real time the result of this analysis.
The charts reflect the main selling or buying trends and their development in the form of movements. As this is a pair where volatility is anything but uncommon, your strategies will need to be tailored to the type of trade you wish to make and whether it is short or long term.
To perform a correct analysis of the EUR/USD pair, you will have to combine the trends reflected in the chart with the results of the fundamental analysis. All this will allow you to draw forecasts to analyse which operation is the most appropriate according to your objectives, as well as the risk involved.
In brief: Trading the EUR/USD pair
The Euro and the Dollar are two of the most widely used currencies globally and also the currency of choice for Forex traders. This currency pair is characterised by huge liquidity and Forex brokers offering EUR/USD usually set a relatively low fixed spread for the euro/dollar pair.
Investing in this pair through an online broker is a good idea because of the limited spreads, higher leverage, access to different currency markets and small deposits.
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