Whether you’re a beginner to forex or simply dabbling into trading EUR/USD for the first time, there are some things you’re going to need to know about the most popular currency pair in the forex market.
EUR/USD is popular for a reason: the Euro and the United States dollar both originate from the world’s two largest economies. This pair has been traded since 1999 and, while generally stable, has also undergone some fairly major fluctuations. EUR/USD is often touted as being the best pair for beginner traders, as it is one of the easiest to analyze and comes with a wealth of trading information and historical analysis.
So, Why Trade EUR/USD?
The EUR/USD is both stable and liquid; it’s a very easy to trade pair that tends to react in fairly predictable ways.
Many forex signals cover EUR/USD and are able to offer fairly consistent returns. This is because the European economy and the economy of the United States as a whole tend to either be stable or fluctuate in fairly easily anticipated intervals. The only exception is when there are sudden economic crashes, which do not occur often — and usually affect other traders rather than forex traders.
EUR/USD can thus be considered one of the “safest” trades; it’s not prone to large fluctuations, but it still does increase and decrease over time.
Of course, there are some “meta” reasons for trading EUR/USD as well. In addition to the pair being stable and fairly predictable in many situations, it also has an incredible volume of information. From tips to tutorials, you’ll be able to find almost everything you need for this currency pair.
Every brokerage covers EUR/USD, the spreads associated with trading it are very tight, and almost all forex trading signals will offer EUR/USD signals. Essentially, this currency pair has widespread support; there’s scarcely a place that you can go in the forex industry that isn’t going to discuss EUR/USD tips and trades. This is one of the core reasons that this currency pair is good for a beginner; there’s simply a plethora of advice and information custom tailored to this pair.
The Primary Influences on EUR/USD
The Euro is an incredibly interesting currency because it is the official currency of multiple countries. The Euro is used in over half of the 28 states in the European Union, ranging from Greece to Belgium.
This can create some interesting political and economic effects; for instance, the Greek crisis of 2015 swiftly became the most significant influence on the Euro’s pricing even though it was only one out of nearly 30 states.
When a crisis or major economic issue isn’t occurring, the Euro and the US tend to fluctuate based on the actions of the European Central Bank and the Federal Reserve. But there usually are some world issues occurring, and this means that those interested in truly dedicating themselves to the EUR/USD pair will need to be very conscientious about their information gathering.
EUR/USD cannot be plausibly affected by the actions of trading, so this is a nonissue; the currency pair is simply too large and too liquid to be impacted by significant changes. This makes it far more stable than niche or exotic currency pairs, which can be inadvertently manipulated by the market.
In general, the easiest way to track the EUR/USD pair is actually by tracking the general health of the US Dollar, because it is one country as opposed to nearly 30. When the Federal Reserve takes actions that improve the overall strength of the dollar, it will be going up in relation to the Euro. Thus most of the primary influences on EUR/USD are also going to be on USD as a whole, and many of the other types of currency pair will be mirroring the performance or following it.
Trading Patterns of EUR/USD Trades
Fundamental analysis is often used in lieu of technical analysis because the EUR/USD has such complicated driving factors. Fundamental analysis looks at the countries involved for unemployment rates, interest rates, and other economic factors; essentially it is looking at the fundamentals of the economy rather than analyzing the actual prices of each currency.
When it comes to currency exchange however; technical analysis is by far more popular. Nevertheless, good fundamental traders can often be very prolific when it comes to EUR/USD trading, because they can quickly identify any potential trading situations before they occur. For instance, a fundamental trader could see that unemployment is rising and could thus anticipate the issues that the currency will quickly be facing.
In terms of technical analysis, it’s often support and resistance factors that are most considered, because EUR/USD really doesn’t fluctuate too much; essentially, the trader can look at the lowest historical prices for the trading pair in recent memory and can trust that the pair will likely go up from there.
Likewise the analysis can look at the highest trading amount and trust that the trade will probably go down. Support and resistance trading trusts that the pair will remain within a certain spectrum for a certain amount of time, but the trader will need to trust themselves to identify these spectrums. And of course any other major method of technical analysis can be used for trading EUR/USD; it is the most common and popular of pairs, and thus there are many common and popular ways of analyzing it.
And there are easier ways to trade EUR/USD as well.
Many people use forex signals when they are trading this pair. Though the currency pair may be easier to analyze than many others, that doesn’t strictly mean that it is easy.
This widely traded currency pair still has many intricacies and is also affected by global economic conditions. So when working with EUR/USD trades, a reliable trading signal can reduce much of the worry associated with trading — a trading signal will give you the information that you need to complete a trade without necessarily having to do the legwork yourself.
Of course, you’ll still need to have a focus on money management and develop your trading discipline; there’s no forex signal that can stop you from being an emotional or inconsistent trader! However, forex trading signals do allow you to tap into the experienced, educated minds of traders that have traded EUR/USD for many years — some of them since the inception of the currency pair way back in 1999.
EUR/USD has many fantastic benefits for beginners and more advanced traders alike.
As the leading and most commonly traded currency pair, EUR/USD leverages the powers of two exceptionally strong currencies in order to create a more stable and reliable trading relationship. There are many opportunities available for those who have a true and in-depth understanding of this currency pair, and there are may forex signals provided by those who have “cracked the code” of the currency and learned more than others about how the currency tends to fluctuate during certain periods of time.
To get started with EUR/USD, you can simply open a forex demo trading account (try our recommended broker!) and begin analysing the live market charts.
You can also use a forex signal service — like provided at FxPremiere — to give you a little extra knowledge and direction with trading this pair.