The EUR/USD Currency Pair – Overview
The EUR/USD is part of the ‘Major Currency Pairs’ category in the foreign exchange market, and it is one of the most traded, as it represents the world’s two largest economies and major currencies: the U.S. dollar and the Euro. It is a highly liquid currency pair in forex trading and popular among traders due to its low spread level. (Bid + Ask/2).
The U.S. dollar is quoted either as the Base or the Counter currency in any major pair. The amount of U.S. dollars in circulation is controlled and determined by the Federal Reserve Bank (FED), while the Federal Open Market Committee (FOMC) is charged under the United States law with overseeing the nation’s open market operations.
The Euro is the largest reserve currency in the world, as well as the official currency of the European Union. The central bank for this currency is the European Central Bank (ECB), which administers monetary policy of the Eurozone.
How to trade CFDs on EUR/USD currency pair
The first step is to find yourself a trustworthy online forex broker, which will protect your capital by keeping clients’ funds in segregated accounts with EU credit institutions. What makes TradeFW the best choice is not only the fact that we are regulated by the Cyprus Securities and Exchange Commission (CySEC), we dedicate ourselves to provide a complete trading experience; and the modern and advanced trading tools, platform and overall services we provide will help you to develop your portfolio.
After funding your account with the required minimum deposit, the process of trading the EUR/USD currency pair can be done in a few steps:
1. Check your leverage value, as it comes in different ratios.
2. Select the trading tool (FX/CFD).
3. Select the EUR/USD currency pair and the trading lot you want.
4. Select the ‘Stop-Loss’ Order.
5. Choose ‘SELL’ or ‘BUY’ to open a trading position.
6. Monitor the EUR/USD chart and exit the position when needed.
TradeFW offers you Negative Balance Protection, which means that the stop out level on your account ensures you do not lose more money than the deposited amount and your account will be brought to a zero balance if it goes into negative as a result of trading activity.
Another aspect you need to consider is that the forex market might be open 24 hours/day, but the EUR/USD currency pair isn’t active all the time. It is recommended to trade it during the following sessions:
• The American Session (New York – USD): 12:00 GMT – 20:00 GMT
• The European Session (London EUR): 07:00 GMT – 16:00 GMT
Finally, the factors that influence and drive the EUR/USD currency pair are crucial and must be analyzed before opening a trading position. The Interest Rates are the most important indicators and are released eight times per year by the Federal Reserve for the U.S. dollar; and on a monthly basis by the European Central Bank (ECB) for the Euro. Other fundamental factors important to the EUR/USD exchange rate analysis are employment rate, the Gross Domestic Product (GDP), the Consumer Price Index, as well as the international news.
TradeFW will provide you with more than just a trading platform; we will ensure you have all the daily news and materials needed to make an informed decision. With us, everything you need to know to place a trade will be in just one place!
Trading Strategies for the EUR/USD Currency Pair
There are numerous strategies that can be applied when trading the EUR/USD pair; but none of them are always 100% efficient, as each trade is different1. However, here are some of the most popular strategies you can try2:
- • The Trend-Based Strategy: is typically recommended for the major currencies and it implies identifying the trends based on the competition between the two major currencies.
• The Fundamental Analysis Strategy: is considered the most important and efficient for any currency pair and it implies analyzing all the economic, political, and social factors that affect the supply and demand of the currency pairs, therefore, their value.
• The Narrow Range Patterns Strategy: gives entry signals for a breakout or a breakdown, since the EUR/USD prints narrow range price bars. This strategy allows traders to enter positions within the narrow range pattern.
• The Sentiment Analysis: implies listening to your own thoughts and gut, and acting based on them.
- Forextraininggroup.com Stuff, “Trading the Euro – Tips for Trading the EURUSD Forex Pair”, forextraininggroup.com, https://forextraininggroup.com/trading-euro-tips-trading-eurusd-forex-pair/
- Alan Farley, “3 Simple Strategies For Euro Traders “, Oct, 5, 2018, investopedia.com, https://www.investopedia.com/articles/forex/111615/3-simple-strategies-euro-traders.asp