The amount of U.S. dollars in circulation is controlled by the Federal Reserve Bank (Fed), and all actions take place during the scheduled Federal Open Market Committee (FOMC) meetings.
The Euro, on the other hand, is the second most traded and the largest reserve currency across the globe. It is the official currency of the European Union and it has been adopted by 19 to 28 states, with Germany and France as the predominant ones.
The EUR/USD forms part of the “Major Currency Pairs” in the foreign exchange market. Majors have the U.S. dollar quoted either as the Base Currency or the Counter Currency and they are also the mostly traded ones on the market.
Here, the EUR/USD pair is hugely impacted by various factors, amongst which, the obvious ones, are the health of the European and American economies.
Now that you are accustomed with the EUR/USD pair, let’s learn how to trade it.
The forex market is open 24 hours a day, 5 days a week. However, that does not mean you should trade whenever you want, it is advisable to trade when the currency pair is active and there is lots of volume and transactions happening. In this case for instance, it is recommended to trade the EUR/USD pair during these schedules:
3 strategies can be used while trading the EUR/USD pair:
The trends of the EUR/USD currency pair often zigzags up and down taking its price from one level to another in a positive feedback loop that can generate considerable momentum. However, this swift movement can end with a shift in the supply/demand equation. The pullback strategy uses this counter trend movement to identify important support and resistance levels that should end the price swing and restore the initial trend direction. These levels often come at prior highs or lows.
The EUR/USD tends to go back and forth within confined boundaries over extended time lapses. This generates well-defined trading ranges and trends. Traders often benefit from low-risk trade entries during these phases. This happens when the support/resistance levels break, giving way to a strong rally or selloff. A good timing accounts for a lot.
The EUR/USD also prints narrow range price bars. These bars lower volatility and raise apathy levels. This gives a considerable entry signal for a breakout or breakdown. With this strategy, traders enter positions within the narrow range pattern, with a tight stop in place in case of a major reversal.