What Makes Up the EUR/USD Forex Pair? (2024)

FAQs

What Makes Up the EUR/USD Forex Pair? ›

The Currency Pair EUR/USD is the shortened term for the euro against U.S. dollar pair, or cross for the currencies of the European Union (EU) and the United States (USD). The currency pair indicates how many U.S. dollars (the quote currency) are needed to purchase one euro (the base currency).

EUR/USD is the forex ticker that tells traders how many US Dollars are needed to buy a Euro. The Euro-Dollar pair is popular with traders because its constituents represent the two largest and most influential economies in the world.

EUR/USD and GBP/USD are positively correlated forex pairs, with an increase or decrease in one often seeing an equal increase of decrease in the other.

The EUR/USD exchange rate is constantly moving to reflect the latest economic data releases, central banks' policy announcements, investor sentiment, and other factors affecting the rate. Trading hours. Foreign exchange markets are open 24 hours a day, giving you more flexibility in when to trade the pair.

There are seven of them: EUR/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, AUD/USD, and NZD/USD. What are the currency crosses? Currency crosses (“crosses”) are the more frequently traded currencies that do NOT include the U.S. dollar in their pairing. Crosses include EUR/GBP, EUR/CAD, GBP/JPY, EUR/CHF, EUR/JPY, etc.

The major currency pairs on the forex market are the EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The four major currency pairs are some of the most actively traded pairs in the world, along with the so-called commodity currency pairs: USD/CAD, AUD/USD, and NZD/USD.

The popular time to trade EUR/USD is when European and US trading sessions overlap. It often trades with the highest liquidity and volatility between 1pm and 4pm GMT. Economics, geopolitics and central banks all move EUR/USD.

Trading the EUR/USD currency pair is also known as trading the "euro." The value of the EUR/USD pair is quoted as 1 euro per x U.S. dollars. For example, if the pair is trading at 1.50, it means it takes 1.5 U.S. dollars to buy 1 euro.

While most currency pairs that quote the dollar list the dollar as the numerator or base currency, EUR/USD has the euro first and the reason is mostly due to convention. The euro was introduced as an accounting currency in 1999 and is the second most active currency behind the U.S. dollar.

EURUSD and XAUUSD (Gold): The moderate positive correlation indicates that EURUSD and the price of gold (XAUUSD) tend to move somewhat in sync at various time intervals.

What is the most stable currency pair in forex? ›

Negative Correlation: The USD/JPY is negatively correlated with other currency pairs such as the eur/usd and GBP/USD. This means that when the USD/JPY is trending higher, the EUR/USD and GBP/USD tend to move in the opposite direction.

Range Trading: Range trading involves identifying areas of support and resistance within which EUR/USD fluctuates. Traders employing this strategy will buy near support levels and sell near resistance levels, aiming to profit from the price oscillations within the range.

Factors that impact the Dollar side of Euro to Dollar:

U.S. Gross Domestic Product (GDP) growth rates. Interest rates set by the Federal Reserve (the “Fed”) Money supply set by the Fed.

Beginners might find the AUD/USD pair to be an excellent choice, since it is more predictable and less likely to spike or drop suddenly. In many studies, this pair has also been cited as one of the least volatile. In conclusion, the best currency pairs to trade for beginners are EUR/USD, GBP/USD, USD/JPY.

Frequently Asked Questions About Forex Currency Pairs

The EUR / USD is actually the best currency to trade, its the most liquid and cheap to trade and most of the moves are quite logical in a way, the EURUSD currency pair often has a negative correlation with USD / CHF and a positive correlation with GBP / USD.

The value of the EURUSD pair is quoted as 1 EUR per x USD. For example, if the pair is trading at 1.50, it means it takes 1.5 USD to buy 1 EUR. What is EURUSD volatility? The term volatility describes the risk related to the changes in an asset's value.

What is the most active forex pair? ›

The optimal Forex trading pairs for scalping and securing modest profits are typically the major currency pairs such as EUR/USD, USD/JPY, GBP/USD, and AUD/USD. These pairs tend to have high liquidity and low spreads, making them ideal for short-term trading strategies like scalping.

On average, the EUR/USD pair has a daily pip movement of approximately 70-100 pips. This pair typically exhibits an average monthly pip movement of around 600-900 pips.

The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.

EUR/USD is the most traded currency pair on the market, with EUR/USD transactions making up 24.0% of daily forex trades in 2019. The popularity of the EUR/USD pair comes from the fact that it is representative of the world's two biggest economies: the European single market and the US.

Sell Position: If you think the value of the base currency will decrease compared to the quote currency, you'd take a Sell position. So, for EUR/USD, taking a Sell position means you believe the price of EUR will weaken against USD (or USD will strengthen against EUR).

The EUR/USD bar chart consists of a series of bars. Each bar's vertical line expresses the difference between the pair's high and low price for the selected time frame, while a horizontal bar to the left denotes the instrument's opening price and a horizontal bar to the right points to the pair's closing price.