EUR/USD is a common investment instrument in foreign exchange markets, representing the price of 1 EURO against 1 USD. It is naturally affected by the market value of both the EUR and USD.
Because the EUR and USD are the most frequently used fiat currencies in global markets and have high liquidity, the risk of fluctuation is very low.
Since currency pairs listed in the forex markets generate profit expectations for investors based on fluctuations, using the EUR/USD pair is more suitable for a long-term investor perspective. One of the questions that investors taking their first steps in the forex markets wonder is "What is EUR/USD?"
The clearest answer to this question is the mathematical value of the correlation between 1 EURO and 1 USD.
In other words, the greater success of the EURO and the underlying projects compared to the USD increases the value of the EURO against the USD, resulting in an increase in the price of the EUR/USD pair within the market.
Understanding this correlation correctly, combined with fundamental analysis skills and market analysis, can help create sound strategies for traders investing in EUR/USD.
Eur usd trading is known as a popular forex strategy, as it is considered to be the most frequently traded pair on online forex platforms in today's conditions.
What is EUR/USD?
For beginner forex traders, the EUR/USD, as with any forex pair, is simply defined as an investment instrument that represents the value of 1 Euro against 1 USD. When 1 EUR/USD is listed at 1.0800 in today's forex markets, it can be inferred that 1 Euro is equal to 1.08 USD.
While it doesn't carry the same high volatility risk as other currencies, it can be affected by global political developments, trade agreements, and global events, leading to low-frequency fluctuations.
A new EU Central Bank decision and interest rate update regarding the EUR/USD directly affect the value of the EUR/USD pair. Therefore, forex traders should monitor economic news such as FED announcements and EU interest rate announcements while investing with the EUR/USD trading model.
This allows them to anticipate future trends in the EUR/USD pair and establish buy and sell positions at the right time.
Why trade EUR/USD?
Today, EUR/USD is the forex pair that accounts for the largest amount and volume of buy-sell transactions among forex traders' portfolios, offering investors a high liquidity opportunity. There are technical reasons for the increased interest in "trade EUR/USD" strategies.
The fact that the EUR and USD are the most widely used currencies in global trade directly increases interest in the EUR/USD pair.
Therefore, forex traders of all skill levels frequently include EUR/USD trading in their portfolios. It is preferred for professional forex investors due to its low volatility risk and for beginner forex traders due to its high liquidity.
Since investors in the forex markets are directly affected by the volatility of the currency pairs they use in their trading, the EUR/USD, with its high volatility, may be more desirable. To explore the forex market and plan your strategies according to the latest market charts, open your demo account now with BlueSuisse!
Potential risks of EUR/USD
Financial instruments carry different risk-return balances, and while they offer some investment opportunities, they also carry risks that investors should not overlook.
While considered one of the most reliable currency pairs listed in the forex markets, the EUR/USD forex pair also carries some potential risk factors.
Among these, EUR/USD price movements have the least impact. However, the direct impact of interest rate decisions and geopolitical developments necessitates caution in terms of volatility.
For example, during the pandemic, the EUR and USD, which are most commonly used in global trading networks, had direct impacts rather than currencies like the JPY.
Therefore, investors implementing trading strategies with the EUR/USD pair have responsibilities that can be considered within the scope of fundamental analysis, such as monitoring global developments and monitoring central bank announcements.
However, these risks are much lower in frequency than other currency pairs. Nevertheless, it is important for investors to choose a reliable broker and consider potential fluctuations among EUR/USD trading strategies.
What moves the EUR/USD price?
While the factors that cause fluctuations in forex pairs aren't always directly identifiable, making these inferences can be easier with the EUR/USD pair.
Therefore, it's crucial for traders trading the EUR/USD pair, whether they're short-term or long-term, to accurately monitor the events and developments that cause fluctuations in this pair.
Common factors that typically cause EUR/USD price movements can be listed as follows:
- FED and ECB interest rate announcements. The FED influences the future trends of the USD, while the ECB influences the movements of the EUR/USD through interest rate announcements.
- Macroeconomic data such as inflation, employment, and economic growth.
- Geopolitical events.
- Central bank announcements. Forex traders who want to track EUR/USD trends should consider these factors by prioritizing fundamental analysis over technical analysis.
Forex resources already offer materials that will enhance the approach of EUR/USD fundamental analysis rather than EUR/USD technical analysis.
How to trade EUR/USD CFDs with us?
One common investment tool in these markets is to try to generate returns by trading EUR/USD CFDs. However, unlike other investment instruments, CFDs not only accurately predict future trends but also shape whether you take a long-term or short-term approach.
CFDs, often abbreviated as Contract for Difference, are frequently used in forex markets. If an investor anticipates a rise in the price of EUR/USD, they maintain their CFD strategy by opening a long position; if they anticipate a fall, they open a short position.
This fundamental principle allows for maximizing returns in EUR/USD trading. Investors should also consider analytical tools like EUR/USD chart analysis, as this provides a data-driven approach, contributing to financial profitability.
With BlueSuisse, one of the most advanced platforms implementing global forex security licenses and protocols, you can confidently pursue your investment projects with EUR/USD CFDs.
Our easy-to-use mobile app allows you to react quickly to sudden market changes. To learn more, open your live trading account now!
What are some EUR/USD trading strategies?
While forex traders aim to generate returns by opening short and long positions on the EUR/USD pair at various levels, it's known that certain strategies are more common. Scalping, day trading, and swing trading are the most common.
Applying these common methods may be more practical when choosing a "EUR/USD trading strategy." The primary goal of a scalping strategy is to generate returns through short-term price movements. However, in day trading, investors anticipate changes throughout the day. Finally, swing trading, which takes a more medium-term approach, follows EUR/USD trends.
If you'd like to easily optimize your short-term and long-term investments by using a service integrated with forex platforms like MT5, you can create your live forex trading account now through BlueSuisse.
What are EUR/USD’s forex trading hours?
Forex markets, one of the largest investment markets with participants from every country, may not be suitable for certain days and hours of trading.
Available 24/5, EUR/USD trading hours generally center on Europe, the United States, and China.
The period between 12:00 PM and 4:00 PM WET (UTC+0), when European and American markets are open simultaneously, is considered the period with the highest liquidity opportunities.
Because access to various markets requires the use of an advanced digital infrastructure, you should not neglect collaborating with experienced online forex trading brokers like BlueSuisse. To learn more about the forex market and create your strategies, open your demo account with BlueSuisse now!