Forex is considered the most lucrative market among all the world’s financial markets, and it is also the largest and most liquid. Trading it can fetch you nice profits even as a newbie, especially when you trade major currency pairs. The EUR/USD is one of the most heavily-traded currency pairs and one of the best investments you could make in 2019. Here’s everything you need to know about it!
The EUR/USD – the most actively-traded currency pair
The EUR/USD is the most heavily-traded currency pair because it represents two of the world’s biggest and most influential economies: the Eurozone and the United States. Along with six other pairs, the EUR/USD represents the majors category – in which the U.S. dollar is quoted either as the Base or the Counter currency. Compared to other pairs from this category, its exchange rate history started not so long ago, when the Euro was first issued in 1999. It opened at 1.1795 and reached its all-time high level of 1.6037 in July, 2008.
The U.S. dollars in circulation are controlled by the Federal Reserve Bank (FED), while the Federal Open Market Committee (FOMC) oversees the nation’s open market operations. On the other hand, the Euro, the official currency of the European Union, represents the largest reserve currency in the world. The central bank in charge of it is the European Central Bank (ECB), which controls the monetary policy of the Eurozone.
Factors that influence the EUR/USD currency pair
It goes without saying that the interest rates statements or adjustments made by the European Central Bank (ECB) and the US Federal Reserve have a crucial importance and can substantially impact this currency pair. The FOMC, as well as the ECB, hold eight regularly scheduled meetings per year (January, March, April, June, July, September, October, December). Moreover, other economic indicators of the two zones, such as the unemployment rate, the inflation, or the Gross Domestic Product (GDP) – are equally important. You might want to check them before opening a trading position on this pair!
The crude oil prices can affect the USD, while debt issues in certain Eurozone economies can affect the Euro. This pair responds in a matter of seconds to high-impact political or economic news releases that come or are related to the US and the Eurozone.
Another two aspects able to make the difference are the time you trade this pair and the currency correlations. For instance, the Forex market operates 24/5, but the EUR/USD pair can’t bring you great returns if you trade it randomly. It is indicated to trade it when it is the most actively traded, which is during the following sessions
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The American Session (New York – USD): 12:00 GMT – 20:00 GMT.
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The European Session (London – EUR): 07:00 GMT – 16:00 GMT.
As for the correlations, the EUR/USD is positively correlated to the GBP/USD and negatively correlated to the USD/CHF. Comparing these charts can help you identify arbitrage trade opportunities for the EUR/USD currency pair.
The EUR/USD currency pair – a worthy investment in 2019
Data released from the Bank for International Settlements (BIS) showed that the EUR/USD currency pair accounts for 23% of the total daily forex trading volume. Due to its trading volume, this pair has the lowest spreads, with an average of 0-2 pips; and has a trading range average of 90-100 pips. With the proper strategy techniques and a professional broker, even a newbie can grasp quick and big profits, especially with the use of leverage.
While this pair’s liquidity can bring you superb returns; as we mentioned, it is very responsive to numerous factors, which can make the trade turn against you instantly and irremediably. To minimize this risk, it’s indicated to place stop-loss and similar orders with your broker, in order to exit the position automatically, at the best possible time. If you’re a beginner, given how challenging the market is, you can trade with a demo account and approach different strategies to see which one suits your style. This way, slowly but steady, you will be able to get the best results when trading this popular currency pair.
All in all, is the EUR/USD currency pair a worthy investment in 2019? Absolutely positive! Forex is the top choice of millions of traders and this pair has always been considered a “gold mine”.
Conclusion
The EUR/USD currency pair is the most traded in the world and it represents two of the biggest economies on the globe, the Eurozone and the United States. Among the factors that influence it are the interest rates of the two currencies, the economic scenery from both regions, and high-impact news related to their political/economic activity. With the lowest spreads in Forex and volatility that opens many doors to profitable opportunities, the EUR/USD currency pair is suitable for both beginner and experienced traders.
