The Euro is the second most used currency behind the dollar.It is used by the 16 countries that comprise the Euro zone.Consequently we cannot undermine the fact that the EURUSD is the most traded currency pair and also the most important.It is so important that the movements of the EURUSD often give a direct indication of what is presently going on in the world of finance.It is great for those new to FOREX as it moves at a sluggish pace compared to the other majors.It moves in an opposite direction to the USDCHF but in the same direction with the GBPUSD.
Basic Features to Know when trading EURUSD
1. It typically has a Bid-Ask spread ranging from 1 to 3 pips.
2. Average daily range of the pair is 90-100 pips
3. The most advisable time of dealing the pair is throughout the Euro session i.e. between 8 GMT and 17 GMT.
Most Important Factors that affect the quote of the EURUSD pair.
1. When trading the EURUSD the most important factor you should know that affects the quote of the pair is the difference in interest rates between the FED and the ECB.
2. A strong dollar also makes the quote of the pair to fall.
3. Primary activities by the FED affect the USD therefore influence the pair directly.
Advantages of trading the EURUSD
1. The most significant reason and greatest pro of trading the EURUSD is because it has a very high liquidity.
2. Being a combination of the two most traded currencies in the USD and the EUR, the EURUSD is the most densely traded currency pair and who wouldn't want to go where everyone goes?
3. The conclusion from the reasons stated above imply the EURUSD has very small Bid-Ask spreads. Bottom fact: you can make a lot of money with the EURUSD but pay minimum commissions and spreads.
4. It moves in an opposite direction to the USDCHF but in the same direction with the GBPUSD.This implies actions of the other major pairs can be used as part of your technical analysis.
Con of trading EURUSD
It is difficult to imagine such a liquid pair with such tight spreads having a trading con.But yes! The EURUSD indeed has one. Volatility.The EURUSD is a very risky pair. Its volatility comes because it is affected by almost any international event in the world and at any given time it may make unwarranted moves.This high instability means the EURUSD is riskier in relation to other less volatile currencies.
Conclusion
The realization is if you have a good grasp of both your fundamental and technical analysis then the EURUSD is for you.If you have a deficiency in any one of this domains the EURUSD will frustrate you because of its riskiness and its tendency to range. Posted by Forex Growth Bot .
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