Before starting trading, novice traders are strongly advised to first identify the currency pair or currency pair that will be traded. So this time we will discuss four things about the Eurusd Currency Pair so that you can make a better trading analysis.
Base and Quote Currency
In the EURUSD pair, EUR is called the base currency, and USD is called the quote currency. That is, the pair shows how much USD it takes to buy 1 EUR. If you see the price of EURUSD on the chart is 1.18768, it means it takes 1.18768 USD to buy 1 EUR. Or in other words, 1 EUR is equal to 1.18768 USD.
If the price of the EUR strengthens against the USD, or the USD weakens against the EUR, the price of the EURUSD pair on the chart will increase. Meanwhile, when the price of the EUR weakens against the USD, or the USD strengthens against the EUR, the price of this pair will fall.
Transaction Volume
The United States and Europe are the two largest economies in the world so that both currencies also have the highest transaction volume. USD leads at 87.6% and EUR is followed at 31.4%. This high transaction results in high liquidity and volatility, so the EURUSD currency pair always attracts the attention of forex traders and other market participants, as it opens up high-profit opportunities. The spreads offered also tend to be small.
Price Drivers
The price movement of the EURUSD pair is very volatile and is influenced by various fundamental factors. One of them is the policy issued by the respective central banks—the European Central Bank (ECB) in Europe and the Fed in the United States. The news from the ECB and the Fed is very important to follow because it has a big influence on the EURUSD price movement.
In addition, other factors influence EURUSD price movements, such as interest rates, unemployment rate, Non-Farm Payroll (NFP) or data on American labor growth in all sectors, trade balance, retail sales, gross domestic product (GDP). ) or the market value of goods and services produced by the state, and so on.
Keep in mind that the EUR is the currency of many European Union countries. So, you also need to update the news of the main countries driving the European economy, such as Germany and France. Follow the latest fundamental news and updates about EURUSD on MIFX News.
Daily Range and Trading Time
The average daily price range or the difference between the highest and lowest prices of EURUSD in a day is in the range of 75-150 pips. Meanwhile, the busiest trading time for this pair is when the European and American sessions overlap, which is 20:00-23:00 WIB in November-February (autumn-winter in America and Europe) and 19:00-22:00 WIB. in March-October (spring-summer in America and Europe).
If you are interested in trading EURUSD, it’s a good idea to set your take profit in the daily trading range. It will be difficult to make a profit if you set a limit above that range unless an unexpected event occurs that has a major impact on the economy.
Profit opportunities from EURUSD transactions will also be wider if you trade when the European and American sessions overlap or overlap because the volatility will tend to be higher. But remember, high-profit opportunities also mean a high risk of loss. So check your risk management again.
Thus the discussion about Eurusd Currency Pair, I hope this article is useful.