History of the EUR/USD Pair

Trading the EUR/USD Forex pair is called trading the “euro”.

What it lacks in a creative nickname, the euro makes up in popularity, as it is currently the most popular Forex currency pair with an average of 28% of total daily volume.

The euro is the unified currency of the 17 Eurozone countries. The idea of a unified European currency was discussed for decades, but it wasn’t until the end of the 20th century that it became a reality. The euro was introduced in 1999 and has since become the second largest reserve currency in the world, with the first being the U.S. dollar.

Trading the Euro: What You Need to Know

  • The European Central Bank (ECB) has a major influence on the value of the pair. It is important to watch for interest rate decisions and other important policy announcements from the bank to gauge which way currency values will be moving. The ECB’s monthly announcements are followed by a press conference with the bank president to elaborate on the bank’s decisions.
  • There are several other important economic indicators in the Eurozone that can predict currency movements. These factors include:
  1. German ZEW Economic Sentiment: As the largest individual economy in the Eurozone, German economic data will often reflect the status of the whole EZ economy.
  2. Various PMIs: Watching the services, construction, and manufacturing PMIs will indicate the overall direction of the economy.
  3. Consumer Price Index (CPI):  The CPI is generally used to measure inflation levels. The CPIs of France, Germany, and the Eurozone as a whole can serve as indicators for the ECBs interest rate announcements.
  4. 10 Year Bond Auctions (Spain and Italy): As two of the Eurozone’s most vulnerable economies, the bond auctions’ interest rates can influence currency rates.
  • U.S. economic data also affects the EUR/USD rate. Here are the reports that you should be watching: employment data such as jobless claims, Consumer Price Indices, retail sales growth, interest rate announcements, and PMI numbers.

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