EURUSD Trading at Markets World

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EUR-USD

EUR/USD Trading

The EUR/USD is the ticker for the euro dollar exchange rate. It is one of the majors in Forex, and because it represents the world’s largest economies and trading blocks, it is also the most liquid pair. EUR/USD is the world’s most liquid currency pair, and offers traders, who wish to buy or sell it, consistently low spreads throughout. It is the most recommended pair to trade for all types of traders, even newbies, because of the unique combination of liquidity and volatility.

Reading the EUR/USD Price

Like any other currency pair, the EUR/USD represents the price of the base currency (euro) in relation to the quote currency (US dollar). Thus, when the price of the EUR-USD pair is rising, it means that the euro is strengthening over the US dollar; and when the price of the EUR/USD is falling, it means that the value of the euro is declining relative to the US dollar.

The price quote of the eur/usd essentially represents the amount of dollars it would take to acquire one euro. So, for example, when the price of the EUR-USD is 1.20, it means that to buy 1 euro, one would have to pay 1.20 US dollars.

History of the EUR-USD

Because the EUR-USD is the most popular currency pair in the Forex trading market, it is hard to imagine that some 20 years ago it was not around. The EUR/USD has only been around since the 1 st of January 1999, when the euro came into existence after 19 European countries adopted a single currency. The EUR-USD started with the value of 1.1795 and fell to an all-time low of 0.8225 in October 2000 as countries were still adjusting to the common currency. It started appreciating as adoption became widespread and posted an all-time high of 1.6037 on July 2008 during the global financial crisis.

In financial circles, the euro-dollar pair is referred to as Fiber, while the other major pair, the GBPUSD, is referred to as Cable. As the euro is much newer, traders decided to make an ‘improvement’ to the ancient US-UK telecommunications cable, to a much newer ‘Fiber’ cable.

Major Bodies Influencing the EUR/USD

Interest rates are the major factor influencing the EUR/USD. As such the ECB (European Central Bank) and the Fed (US Federal Reserve Bank) are the major bodies that EUR-USD traders track for a broader fundamental view of the pair. The Fed releases the Federal Funds rate eight times a year, while the ECB does so monthly. The actual rates are important, but as well, traders watch out for the accompanying rate statement which provides a clue of the future policy direction of the two most powerful Central Banks.

Employment numbers also impact the EUR/USD significantly. In the US, the Nonfarm Payroll numbers are released by the Bureau of Labor Statistics on the first Friday of every month, with this data usually providing so much volatility for the pair. In Europe, consolidated employment numbers for the region, as well as those of major economies, such as France and Germany, also impact the price of the EUR/USD greatly.

EUR-USD Correlations

The EUR-USD has always posted a near perfect negative correlation with the USDCHF, which means that the Fiber has almost always risen when the USDCHF is falling. On the other hand, EUR/USD has always shown a positive correlation with the GBPUSD. These correlations are near perfect, and largely because the pairs share the US dollar, as well as European heritage. Still, correlations do change, and traders must always trade them carefully, doing the necessary analysis.

EUR/USD Trading in One Click

The EUR and USD are two of the world’s most important currencies, and because these two currencies are multinational, many corporation choose to conduct business transactions in both the U.S. dollar and or the Euro. Since these currencies have a large number of market participants and it is constantly available to trade in the market, this currency pair is considered the most volatile pair for traders who want to participate in forex trading between these two currencies

Because the EUR/USD is one of the most popular currency, arbitrage opportunities are often very hard to find, meaning, the trading of these assets in these market is almost impossible to find.

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The ITRADER team provides its clients with the opportunity to not only participate in Forex trading, but also an excellent platform to participate in forex trading, and to trade in this sought after currency pair. The combination of the volatility and liquidity of currency pair makes it an excellent training ground for people who are beginners in the world of Forex Trading.

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Your guide to trading the EUR/USD pair

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Trading EUR/USD

As the two largest and mostly commonly traded currencies in the world, the euro (EUR) and US dollar (USD) represent the highest proportion of trades made in international finance. Euro to USD (EUR/USD) trading occurs constantly and the pairing of the two is extremely popular; it’s actually the most liquid currency pairing in the world.

A large number of companies operate both within Europe and the Unites States, owning offices in both locations. As such, this is one reason why a large amount of exchanges are made using the two currencies every single day.

However, this isn’t the only reason why euro to US dollar trades see such high volumes every day. Other reasons for trading and investing include: the vast amount of economic and financial data available on the EUR/USD exchange rate, the wide range of market participants and the combination of volatility and liquidity in the EUR/USD market – all of which make trading this pair attractive to newcomers and veterans alike.

The history of EUR/USD

Despite being a currency pair that has only existed since the end of the 20th century, EUR/USD has proven itself to be a powerhouse in modern forex trading.

The euro itself was first envisioned towards the beginning of the 20th century. However, it wasn’t fully realised until the end of the century. It first came into being as a purely digital currency, and then as physical notes and coins. This common currency for a large proportion of Europe quickly gained traction and became cemented as a market leader. Euro trading swiftly developed into a new and exciting financial opportunity.

The dollar, of course, is far older, with roots stemming back to 1792 and the creation of the United States Constitution. Since that time, the dollar has grown considerably in strength and, paired with the euro, has become something of a global standard among investors and traders.

The euro rate history, however, has not always been so stellar – some blips have occurred over its short lifespan. Between 2008 and 2020, the euro saw an historic record fall. This followed the fallout from the 2008 financial crisis: while US subprime mortgage crisis increased its strength, the crisis caused a recession in Europe. Over the next few years the EUR/USD experienced large price swings as various economic and political events affected it.

Major factors influencing EUR/USD

In these two subsections, we’re going to take a deeper look at this market and discover the roles of both currencies when it comes to the euro to US dollar trading landscape.

Role of Euro

As interest rates play a major part in the moves of the EUR/USD exchange rate, it will come as no surprise that the European Central Bank (ECB) is one of the major institutions to which investors and traders will pay close attention when making decisions that might affect the future direction of this currency pair.

The ECB releases monthly reports concerning interest rates and economic outlook, which are used by investors and traders as indicators about future policy direction and the effect these may have on the EUR/USD exchange rate.

Wider economic data, such as consolidated employment numbers, can also impact the EUR/USD exchange rate and can be a vital source of information for traders.

Role of USD

As with its counterpart, the US dollar is influenced by its own central bank, the US Federal Reserve – often referred to as the Fed. The institution releases the Federal Funds rate and rate statements eight times a year, which can provide insight into the state of the US economy and impact the currency.

In the US, the Bureau of Labor Statistics release Nonfarm Payroll numbers usually on the first Friday of every month. This is the US unemployment data and can often cause volatility in the EUR/USD pairing. It is closely watched by traders and investors around the world.

How to trade EUR/USD

In the next two subsections, we’re going to explore how euro to USD trading occurs and why it is such a popular markets for traders and investors. We’ll be talking about contracts for difference (CFDs), specifically CFDs on forex – a popular form of derivative trading which enables investors to speculate on the rise and fall of prices across global financial markets.

CFD trading offers great opportunities with a reliable CFD broker. Sign up at Capital.com and access the most popular global markets via our web platform or our ultimate trading app.

Trading CFDs on EUR/USD

For many traders, the most attractive part of using CFDs is being able to trade speculatively on the movement of foreign exchange markets without having to actually own the currencies. Because of the volume and liquidity of EUR/USD, it has always been a popular choice for many when dealing with CFDs on forex.

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