The trading volume of the forex market, the largest and most liquid financial market in the world, is around trillions of dollars on a daily basis; among which, the trading volume of EUR/USD forex trading activities take a great part and it is regarded as the most traded currency pair in the forex market. In order to trade currency successfully, it is indispensable for traders to know this liquid currency pairs beforehand.
What traders need to know things about USD?
Euro and U.S. dollar are the two mostly used currencies in the world, representing the two major economy entities. As you might know, USD has been considered as one of the safest and reliable currencies for a long period of time around the world and it is the number one reserve currency worldwide. Although the confidence of U. S. dollar and U.S economy has dropped since the financial crisis, the position of U.S. dollar in the forex market still stands firm. Well, you may want to know what determinants affect the USD. Generally, the value of U.S. dollars is influenced by many economic, political and social factors like GDP, interest rate, debts, trade balance, employment rate, inflation, election, and natural disaster and so on.
What traders need to know things about EUR?
Euro is regarded as the second largest currency in the forex market after the US dollar, which is used by the 17 countries that comprise the Euro zone. Therefore, traders shouldn’t underestimate the importance of eurusd forex currency pair since it is one of the most traded and liquid currency pairs in the world. More importantly, the movements of eurusd forex currency pair usually indicate the current forex market status. The value of EUR can be decided by many factors and it is widely used in the Euro zone; thus, traders need to keep informed of what is going on around the entire Euro zone in order to know the trend of this currency pair.
What traders need to be clear when trading eurusd forex currency pair?
Traders need to know more about the currency pair well in order to capture more profits or minimize risks. First of all, traders need to know the most key element that can influence the eurusdforex currency pair is the difference in interest rates between the FED and the ECB. Secondly, due to the great liquidity of this currency pair, many forex brokers usually offer a bid ask spread of between 1 and 3 pips. Moreover, traders need to know that a weakening USD tends to result in an increase in the EUR/USD quote while a strengthening USD is prone to lead to a decrease in the eurusd forex quote. Furthermore, most traders choose to trade EUR/USD between 8 GMT and 17 GMT or the European session due the high liquidity of this time period.