Trading the EURUSD at Boss Capital

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Contents

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Reading time: 17 minutes

The US Dollar and the Euro are two of the most prominent and well-known currencies in the world. The Euro versus US Dollar (EUR/USD) currency pair has the largest global trading volume, and is therefore the most traded currency pair. Whether you find the instrument easy or difficult to trade on, it’s a not a pair that many traders neglect, due to its daily volatility and price movement.

This article provides a detailed account of all the angles connected to Euro/Dollar trading, EUR vs USD strategies, Euro Dollar news, and much more. It will mention the top strategies that readers should consider, and the various factors and forces driving the price movement and direction.

The Basics of the Euro Dollar Currency Pair

The US Dollar (USD) and Euro (EUR) are official currencies of their respective economic zones in the US, and the nations within the European Union. The FOMC (Federal Open Market Committee) is a branch of the Federal Reserve (FED) that determines the direction of monetary policy for the US, which in turn impacts the value and perceived value of the US Dollar. The European Central Bank (ECB) is the main central bank for the Euro and the Euro zone, and has a similar impact on the Euro currency.

Both currencies are part of the Foreign Exchange (Forex) market. In the Forex market, the price of one currency moves up, down, or sideways versus another currency, which is referred to as a currency pair. The Euro (EUR) and the US Dollar (USD) form a currency pair which is known as the Euro/Dollar, EURUSD or EUR/USD. Both the EUR and the USD also form currency pairs with other currencies such as, the Euro versus the Great British Pound (EUR/GBP) or the US Dollar versus the Canadian Dollar (USD/CAD).

The price movement of the EUR/USD reflects the change between the Euro and Dollar. Here is how it works:

  • When the price of the Euro Dollar goes up (for instance from 1.15 to 1.17) the Euro becomes more valuable and the USD becomes less valuable.
  • When the price of the Euro Dollar goes down (for instance from 1.22 to 1.19) the Euro becomes less valuable and the USD becomes more valuable.
  • The opposite is true for those that use the USD/EUR abbreviation (USD versus EUR goes up, then USD becomes more valuable). It’s important to note that this version of the abbreviation is not common.

When the price moves up or down, it indicates that one currency is becoming stronger, or the other one is becoming weaker, or even both. If the EUR/USD is moving up, it could mean that the Euro is becoming stronger versus the US Dollar, or it could mean that the US Dollar is weakening – or both. Regardless of what is driving the price change, the fact remains that traders can observe the current balance of power by simply watching price movement within the Euro Dollar currency pair.

Depicted: Admiral Markets MT5 with MT5SE Add-on EUR/USD – Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Euro Dollar – The Most Traded Currency Pair

The US Dollar (USD) is the world’s most traded currency, and the Euro claims the second spot, according to a Central Bank Survey conducted in 2020. The USD takes a daily share of 87.6% of all currency related trade activity, which is 2.79 times as much as the Euro’s share at 31.4%.

There are a couple of conclusions that can be considered:

  • The US Dollar’s lead is enormous, the USD has the largest daily share by far
  • It does not come as a surprise that the EUR/USD is a highly traded currency pair, as it incorporates the world’s first and second highest valued currencies

The rest of the top five is comprised of the Japanese Yen with a 21.6% share, Pound Sterling at 12.8%, and the Australian Dollar at 6.9%. The table below displays percentages for the entire top 10 currencies.

Rank Currency Currency symbol % daily share (April 2020)
1 United States dollar USD (US$) 87.6%
2 Euro EUR (€) 31.4%
3 Japanese Yen JPY (¥) 21.6%
4 Pound sterling GBP (£) 12.8%
5 Australian dollar AUD (A$) 6.9%
6 Canadian dollar CAD (C$) 5.1%
7 Swiss franc CHF (Fr) 4.8%
8 Renminbi CNY (元) 4.0%
9 Swedish krona SEK (kr) 2.2%
10 New Zealand dollar NZD (NZ$) 2.1%
Source: Triennial Central Bank Survey Foreign exchange turnover in April 2020. Data range: 11 December 2020 – Retrieved 22 March 2020.

The currencies with a higher daily share are usually the most interesting currency pairs for traders, because price movement tends to be stronger and more regular from an intra-day, and daily basis perspective , in comparison with less frequently traded currencies, which we will explore now. Most traders tend to stick to “major” currency pairs such as the EUR/USD, GBP/USD, USD/JPY, EUR/JPY, GBP/JPY , whereas some traders venture into lesser known currency crosses such as GBP/AUD, EUR/NZD, CAD/JPY.

The most popular however, is perhaps the Euro/Dollar, as it’s the most traded currency pair in the world. The “exotic” currency pairs, such as, Czech Crown (CZK) versus Mexican Peso (MXN/CZK) or CHF/JPY (Swiss Franc versus Japanese Yen) are often more difficult to trade due to lower volatility, and are not recommended for beginning traders.

Depicted: Admiral Markets MT5 with MT5SE Add-on EUR/USD – Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Depicted: Admiral Markets MT5 with MT5SE Add-on EUR/USDDisclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Eurodollar News and Factors Impacting EURUSD

There are multiple factors that impact the price movement of the EUR/USD currency pair. These factors are usually grouped together as follows:

Fundamental Analysis

The macro economic data of a country like the U.S. or an economic zone like the EU indicates the long-term direction of their economies. The relationship between them decides how the price of the EUR/USD currency pair behaves. The most important economic data is connected to Euro and US Dollar interest rates, inflation rates, unemployment figures, and balance of trade numbers (import and export). You can find these economic announcements, figures, statistics, and associated forecasts through our Forex calendar, if you are interested in tracking them as they are released.

Additionally, messages from the FED and ECB are also critical, as they convey the view of the main decision makers on the board, with regards to the current and future economic outlooks within the U.S. and EU. Fundamental analysts evaluate these factors and try to assess the directions of these numbers, and the impact they will have on each currency and currency pair.

News Events and Data Releases

There is a list of economic data that is released every day for multiple currencies. Not all economic data figures and news events are equally important for all currencies. Of course, the Euro zone production numbers are important for currency pairs with the Euro. To indicate whether the news is expected to be important or not, Admiral Markets uses a color code system for indicating important (red), medium (yellow) and lower (green) impact news in its Forex Calendar.

There are a few events that will impact the entire market, which include among others, the NFP (Non-Farm Payroll) in the U.S, and the FOMC interest rate decision for the U.S. The economic data impacts prices because it provides information about whether the U.S. and the EU are performing better or worse in comparison with the past. There are also expected figures that are determined beforehand, and analysts can compare the actual numbers to the expected ones, and see if there was a positive or negative change.

Wave, Price and Technical Analysis

Traders also use charts for their analyses and trading decisions. These traders analyse the EUR/USD graph to understand the previous and current prices, which help them assess whether there are any potential trading opportunities in the future.

There are three main branches for studying price, which are:

  • Technical Analysis: reviews trends, patterns, support and resistance levels using indicators such as MACD and Keltner channel, and tools such as trend lines and Fibonacci.
  • Price Analysis: reviews price action and, for instance, Japanese Candlestick patterns, for understanding how all factors impact the flow of price. These patterns can indicate whether the price is moving up or down.
  • Wave Analysis: reviews price patterns via the Elliott Wave theory, which explains that price moves with the trend in five waves, and retraces in three waves. Wave analysts study past waves to determine the current and next bullish, bearish, corrective or impulsive waves.

Of course, last but not least, traders can also use a combination of some, or all of the factors mentioned above as explained in the Admiral Markets Forex 101 course.

Depicted: Admiral Markets MT5 with MT5SE Add-on EUR/USD – Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Strategies for Trading the Euro Dollar

The Euro Dollar price tends to move up and down a lot during the trading day and week, which offers opportunities for traders to benefit from the price swings. This is how traders can capitalize on such price movements:

  • Traders can enter a long or buy position if their analysis indicates that the EUR/USD has a better chance of moving up (compared to the current price) and attempt to sell at a higher price.
  • Traders can enter a short or sell position if their analysis indicates that the EUR/USD has a better chance of moving down (compared to the current price) and try to buy at a lower price.
  • Traders can choose not to enter the market and wait to see if their analysis indicates indecision.

There are dozens of strategies available for each analytical category. Whether you are trading based on fundamental analysis, economic data, technical analysis, price analysis or wave analysis, there are multiple ways of approaching the Forex market in general, and the EUR/USD specifically. Besides existing methods, traders are also free to develop their own trading strategies, but be aware that all methods need to be properly tested. The best way to do conduct such research is by testing through:

  • Checking your ideas in the past via a Expert Advisor (EA), and manual back testing
  • By forward testing via a Demo account or a real trading account.

Trading the euro-dollar pair with fundamental analysis

With fundamental analysis, traders mostly focus on long-term position trades which are aimed at larger swings, and which could take weeks, months, or even whole financial quarters. The strategy is similar to EUR/USD investing, as it is long-term oriented. Traders try to trade large economic discrepancies and trends, for instance the EUR/USD increasing from 1.05 to 1.25.

Trading EURUSD with technical, price and wave analysis

The main benefit of trading the EUR/USD is that it reacts well to technical, price, and wave strategies. The good news with that is that these elements offer a large mixture of possibilities to use and create trading systems. The wide range of methods, indicators, and tools provide traders with infinite ways to tackle the market.

That being said, traders who use one or all of these three methods are usually intraday traders (who open and close in one trading day), intraweek traders (who open and close in one trading week), or swing traders (over a maximum of multiple weeks).

The trading systems are also mostly focused on five different types of scenarios:

  • With the trend setups
  • Breakout setups
  • Bounce setups
  • Reversal setups (against the trend)
  • Range setups (no trend is visible)

Each of the three segments – technical, price, and wave – have their own methods and tools, although keep in mind that this can vary widely from trader to trader as well. In general, they will use the indicators to determine entry and exit spots to gain an edge and profit in the long run. The indicators help avoid spots with lower probability, and to choose zones with higher probability. This is valid in the long-term, but not case by case, because trading always remains a probability, and absolute certainty can ever be achieved.

Depicted: Admiral Markets MT5 with MT5SE Add-on EUR/USD – Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

    Technical analysis strategies are often based on indicators such as the RSI (Relative Strength Index), ATR (Average True Range), Keltner channel, Pivot Points, MACD, and many more. They look for probable bounce or breakout spots using these indicators.

For instance, a breakout above the Keltner channel could confirm a potential EUR/USD long setup. Traders could also use the indicators for determining a pullback within the trend, or the reversal spot within a range. If you are interested in using the Keltner channel indicator, why not consider using Admiral Markets’ own Keltner channel? And see how it compares with the regular one.

  • Price analysis strategies focus on understanding the sequence of bars or candlesticks to determine whether the price is likely to continue, break, bounce, or reverse. The candlestick lows, highs, opens, and closes provide critical information about price movement. For instance, a EUR/USD daily candle close that is far from the candle high could indicate exhaustion of the trend.
  • Wave analysis strategies base their decision on wave patterns. For instance, an EUR/USD 4 hour chart could see a bullish wave 1-2 pattern, and price bouncing at a 61.8% Fibonacci support level. A wave trader could take a long entry at or after the reversal to try to trade the expected wave 3. Keep in mind that all strategies should work with a stop loss (or exit point if the trade goes against your expected direction) and should exercise proper risk management.

Trading the EUR/USD based on market sentiment

To discover how to combine moving average crossover and market sentiment, and how sentiment can reduce your trade frequency while increasing your profitability, watch this free webinar on EUR/USD trading here:

Best Time for Trading the Euro Dollar Pair

The Forex market, including trading with the Euro/Dollar, is open for 24-hours a day, 5 trading days a week. There are only two non-trading days per week, or 48 hours where the market is closed. Traders can start trading with Admiral Markets between 5pm EST or 9pm GMT on Sundays till 4pm EST or 8pm GMT on Fridays.

The best time for trading the Euro Dollar, just like any other currency pair, is to trade it when the market is active, which means that there is the presence of decent price volatility and movement. Currency pairs tend to be more active when one or both of the currencies are operating in the usual business, and the stock market hours of that country or economic zone. Here is an overview:

  • The Euro for instance, is most active between 8am to 4 or from 5pm local European time.
  • The same is true for the US Dollar which is most active between 8am EST to 4pm EST.
  • There is a two to three hour overlap when both the European and the American market are open, which tends to offer a period with the most volume and volatility.

Generally speaking, the Euro Dollar strategies can be best traded between 7am GMT till about 8pm GMT, which is when the chart shows the most price volatility. Before and after the price movement slows down significantly. But the best period appears to be the overlapping hours between 12pm GMT to about 3pm GMT when the markets in the US, London, and Europe are open.

Source: thebalance.com – ”Best Time to Day Trade the EUR/USD Forex Pair”/ ”Volatility In Pips EUR/USD Per Hour Of The Day”

The higher volatility is especially useful for traders that trade:

  1. With the trend
  2. Breakout setups
  3. Intraday Euro Dollar trading strategies

The lower volatility periods could still be interesting to trade in the following two cases:

  • A trader creates a special strategy tailor made to this environment, which often means trading ranges and false breaks
  • A trader finds an entry at an earlier spot before the market activity increases

Although the usual time when price moves remains more or less stable over time, the volatility of the price does fluctuate on a daily, weekly, and monthly basis. At certain times, the Euro Dollar will move more or less due to changes in factors impacting the currency pair:

  • News events
  • Releases of economic data
  • Press conferences of Central Bankers
  • Changes in macro economic outlook
  • Technical analysis aspects
  • Chart patterns and wave patterns

Platform for Trading the Euro Dollar

The best euro-dollar trading platform for trading the Euro Dollar currency pair is arguably the MT5 Supreme Edition. The MetaTrader (MT) platform offers a charting platform that is easy to use and navigate. Traders can view the EUR/USD currency pair, and a wide range of other financial instruments, including CFDs, commodities, and stock indexes.

The Supreme Edition plugin from Admiral Markets offers a long list of extra indicators and tools that are not a standard part of the usual MetaTrader package. The additional features include, but are not limited to, the sentiment trader, the mini terminal, the trade terminal, the tick chart trader, the trading simulator, mini charts perfect for multiple time frame analysis, and an extra indicator package including Pivot Points and the Keltner Channel.

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About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world’s most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

EUR/USD Trading Positions

WHAT IS THE TRADING POSITIONS TOOL AND WHY TO USE IT?

The Trading Position page provides a glance as how FXStreet dedicated contributors (Retail traders, Brokers and Banks) are currently positioned in the EUR/USD. It includes Entry price, Stop Loss and Take profits (up to 3, from the most conservative to the most risky level). It is a positioning indicator that delivers actionable price levels such as the average buy and average sell prices. The tool shows how liquidity is distributed along the price scale. Price levels with a lot of orders may act as support and resistance areas. It takes into account not only the entry prices but more importantly where participants have their stop losses and take profit levels. These orders are translated into support and resistance levels, as well as acceleration points.

HISTORIC RANGES FOR EUR/USD

The EUR/USD reached an all time high of 1.6038 in July 2008 and a record low of 0.8231 in October 2000.

COMMODITIES THAT INFLUENCE THE MOST EUR/USD

When trading EUR/USD, it’s recommended to have a look at other assets, including commodities, in particular Oil, Gold, Silver and Corn.

HOW TO READ THE GRAPHS?

Besides the table with all participants’ individual positions, graphic representations aggregate and visualize the data.

  • The Red and Green line shows the percentage of buy and sell positions for each currency pair.
  • You also get the Average Sell Price (in red) and Average Buy Price (green) just next to the gauge graph. Trend traders can take advantage of these price levels in those circumstances when the current market price is at better levels than the average aggregate.
  • If you click on the pair, you will access another page with the Liquidity Distribution illustration. On this graph, we draw a vertical line for each contributor’s price position (price is horizontally laid out) so you can quickly figure out how the liquidity is distributed along the price scale. Price levels with a lot of orders may act as support and resistance areas.

MOST INFLUENTIAL LEADING FIGURES FOR EUR/USD

The most influential organizations for the EUR/USD are the Fed, the US Government and European Central Bank and their presidents. Currently, the FED Chairman is Jerome Powell, the president of the United States is Donald Trump and the President of the ECB is Christine Lagarde. Their speeches, statements, wording and decisions are closely watched to detect any signal of next potential move in the pair.

Currency Trading Positions

The purpose of the Trading Positions table is to provide a glance of EUR/USD as to where our dedicated contributors are currently positioned. You can access the original analysis reports by clicking on each position.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

EUR/USD (EURUSD=X)

Previous Close 1.081
Open 1.08
Bid 1.079
Day’s Range 1.079 – 1.08
52 Week Range 1.0655 – 1.1496
Ask 1.079

Covid-19 Pandemic Creates High Risks, Triggers Deep Global Recession

The global economy will shrink by around -0.5% this year after the exceptional first-half disruption caused by the Covid-19 pandemic with cyclical and structural implications for sovereign credit profiles.

EUR/USD Price Forecast – Euro Shows Weakness Again

The Euro initially tried to rally a bit during the trading session on Monday but gave back the gains relatively early. At this point, the market looks as if it is hanging around the 1.08 level in general.

EUR/USD Mid-Session Technical Analysis for April 6, 2020

Based on the early price action and the current price at 1.0799, the direction of the EUR/USD is likely to be determined by trader reaction to the short-term Fibonacci level at 1.0831.

EUR/USD Stopped Falling

After a continuous decline, the major currency pair is reaching stability early in the new April week; it is trading at 1.0810.

EUR/USD Daily Forecast – Euro Consolidates Near 1.0800 Support

After declining for five straight sessions, EUR/USD is seen trading sideways in a narrow range above support at 1.0800 to start the new week.

Stocks – U.S. Futures Higher Amid Optimism Over Virus

Additionally, gold futures rose 1.4% to $1,668.30/oz, while EUR/USD traded at $1.0811, up 0.1%.

Stocks – Europe Pushes Higher; Virus Optimism Rises

European stock markets posted strong gains Monday, helped by signs of a slowdown in coronavirus-related deaths in the region, and by expectations of more financial aid to help bolster its battered economies. The broader-based Stoxx 600 Europe index climbed 2.6%. The number of deaths has fallen in recent days in Italy and Spain, the two European countries worst hit, as well as in Germany, the region’s most populous country.

Yen Begins to Feel Coronavirus Heat

The Japanese yen has seen selling Monday, with the country’s government expected to call a state of emergency in response to the coronavirus pandemic. The U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 100.685, largely flat, while EUR/USD rose 0.1% to 1.0823 and GBP/USD rose 0.1% to 1.2269. Japan has been relatively lightly hit by the spread of the coronavirus pandemic so far, registering just over 3,600 cases, according to Johns Hopkins University.

The Week Ahead – COVID-19 and OPEC in Focus, with Economic Data on the Lighter Side

While it is a shortened week, with economic data on the lighter side, there is still plenty for the markets to focus on and OPEC and COVID-19 in particular.

EUR/USD Weekly Price Forecast – Euro Has Rough Week

The Euro has had a rough week, slicing back down below the 1.08 level on Friday and wiping out most of the gains from the previous candle.

EUR/USD Price Forecast – Euro Falls Hard Yet Again

The Euro fell quite a bit during the trading session on Friday, reaching below the 1.08 level. Having said that, the market did stabilize a bit around the jobs figure, and therefore we could get a slight bounce.

Stocks – US Futures Lower; Economic Damage Mounts

Additionally, gold futures dropped 0.5% to $1,630.05/oz, while EUR/USD traded at $1.0808, down 0.5%.

EUR/USD Mid-Session Technical Analysis for April 3, 2020

Based on the early price action and the current price at 1.0800, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the uptrending Gann angle at 1.0816 and the short-term Fibonacci level at 1.0831.

EUR/USD Daily Forecast – Euro on Pace to Post Fifth Straight Day of Losses

EUR/USD dipped below the 1.0800 handle in early European trading on Friday and is down nearly 3% in the week thus far as the dollar has regained upward momentum.

Eurozone services PMI skids to worst-ever 26.4 in March

The IHS Markit eurozone services purchasing managers index in March slumped to a reading of 26.4 from 52.6 in February, the worst-ever reading in the history of the series. Any level below 50 indicates contracting conditions, and the final reading was worse than the flash reading of 28.4. In Italy, the services PMI fell to 17.4 in March, plunging from 52.1 in February. “The data indicate that the eurozone economy is already contracting at an annualised rate approaching 10%, with worse inevitably to come in the near future,” said Chris Williamson, chief business economist at IHS Markit.

Dollar Still in Demand, For Now

At 3:05 AM ET (0705 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, rose above 100 for the first time in over a week to stand at 100.460, up 0.2% on the day and up some 0.6% on the week.

Service Sector PMI and U.S Nonfarm Payrolls Put the EUR and USD in the Spotlight

Nonfarm payrolls and service sector PMIs are in focus today. With the West in shutdown mode, both labor market numbers and PMIs are expected to be dire…

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