Introduction

EURUSD is the world’s most traded currency pair, accounting for 22.7% of forex volume. Trading EURUSD is best during London-NY overlap (1-4 pm GMT) using strategies including trend following, breakouts, and news trading. Traders around the globe, including in South Africa, can trade based on its price movements by buying or selling EUR/USD through regulated brokers like Vantage. This pair’s immense liquidity, tight spreads (often starting from 0.0 pips on Vantage accounts), and 24-hour market access make it a popular choice for both beginner and experienced forex traders.

EURUSD Trading Quick Stats

Metric	Value
Global Daily Volume	~$1.7 trillion (largest of any forex pair) – ~22.7% of worldwide FX turnover.
Spread at Vantage	From 0.0 pips (ultra-tight spreads on RAW ECN accounts),~1.2 pips typical on Standard accounts.
Most active Trading Time	London/New York overlap (approximately 12:00–16:00 GMT) when volatility and liquidity peak.
Market Hour	24 hours a day, 5 days a week (forex market open Mon-Fri). Sessions in Asia, Europe, and the U.S. provide near-continuous trading opportunities.
Typical Volatility	Moderate. Often, there is a daily range of 50-70 pips (can spike higher on major news). High liquidity keeps EUR/USD relatively stable compared to exotic pairs.

What is EURUSD Trading? 

EUR/USD is the currency pair that matches the exchange rate of the euro (EUR) against the US dollar (USD). South Africans who want to learn and understand how to trade EUR/USD can start using financial derivatives, such as contracts for difference (CFDs). They can also buy or sell the physical currency. 

In trading the EUR/USD pair, the euro is the base currency and the US dollar is the quote currency. This means the EUR/USD price refers to the number of dollars one euro can buy at any given time. For example, if the market price is currently 1.10, it takes $1.10 to buy €1. 

Regarding the forex market:

• The US dollar is the world’s most dominant currency, according to the BIS Triennial Central Bank Survey ^[1]. USD accounted for 88% of all forex trades in April 2022.  
• The euro remained the world’s second-most-traded currency, accounting for over 30.5% of all trades in April 2022 ^[2]. This is down slightly from 32% in the previous BIS Survey produced in 2019. 
• As a result, trading in EUR/USD accounts for 22.7% of the total forex market turnover according to the April 2022 BIS Survey ^[3].  As a guide, the next most traded pair is USD/JPY, which accounts for 13.5% of total volume ^[4].

Quick facts about Trading EURUSD in the forex market:

The pair reflects the relative strength of the Eurozone economy vs. the U.S. economy. EUR/USD trading officially began in 1999, when the euro was introduced (and in physical form in 2002), making it a relatively young currency pair. Since its inception, EUR/USD has seen significant milestones, from an all-time high around 1.6038 in 2008 to a 20-year low near 0.9535 in 2022 (more on these in the Historical Trends section). Its popularity also means there is abundant analysis, news, and tools available for EUR/USD traders.

EURUSD History

Before the birth of the Eurozone and its own currency, there were several attempts to create a joint European economy. The European Economic Community (EEC) was established in 1957 to create the free movement of people, goods, and services across the borders of six countries [5]. This economic integration led to the formation of the European Community (EC) in 1993, which later became the EU’s forerunner. 

Meanwhile, policymakers founded the European Monetary System (EMS) in 1979. This was an adjustable exchange rate mechanism which promoted monetary policy stability throughout the continent by reducing major exchange rate fluctuations between competing European Community members ^[6]. The Maastricht Treaty in 1992 took over from this arrangement, with plans to set up a single currency. This remained in place until 1999, when it was replaced by the European Economic and Monetary Union (EMU). 

EMU ultimately led to the creation of the euro, which was introduced on 1 January 1999. This seminal date saw national currencies like the French Franc and German Deutschmark, which had competed against the US Dollar individually, disappear as the euro launched in digital form. But trading in EUR/USD didn’t begin until 2002, when the first 12 European Union countries officially adopted the euro, and the legacy national currencies were folded into the new, physical single currency ^[7].

Why Trade the EUR/USD Currency Pair?

You can explore using the Vantage Demo Account. Or grab your Free Vantage Live account to test with real market conditions on the Vantage Markets trading platform, especially on volatile pairs like EUR/USD or XAU/USD.

EUR/USD accounts for nearly one in four forex transactions. This means it has the largest global trading volume and is the most popular currency pair ^[8]. Four reasons to trade EUR/USD are:

• Global macro gauge – By combining the first- and third-largest economies, EUR/USD is a strong indicator of the global economy’s overall health. Prices constantly reflect the latest economic data, central bank policies, and numerous other fundamental and technical factors. 
• Liquidity – The most traded currency pair indicates high liquidity. This enables traders to easily enter and exit their EUR/USD positions. 
• Low spreads – Along with being the most liquid currency pair, it comes with consistently ultra-low spreads, even in times of high volatility. Banks, funds, traders, commercial users, and speculators are constantly buying and selling EUR/USD.
• Trading hours – Foreign exchange markets are open 24 hours a day, with three continuous, overlapping trading sessions in Asia, Europe, and the U.S. While liquidity may be lower at the start of the day, volumes are generally high enough to give traders flexibility when trading EUR/USD. 

In short, trading EUR/USD provides a combination of low cost, plentiful information, and constant action. Whether you’re a day trader looking for frequent setups or a long-term investor watching economic cycles, EUR/USD offers a suitable arena. It’s often recommended for beginners due to its stability and for experienced traders due to its liquidity and tight spreads.

Comparison with Other Major Currency Pairs

To appreciate EUR/USD’s advantages, consider that it accounts for nearly 23% of global FX volume, whereas the next-largest pair (USD/JPY) accounts for about 13.5%. Typical spreads on EUR/USD are also the lowest among majors – often ~0.1–1.2 pips, compared to, say, GBP/USD, which might average closer to 1.3 pips. The table below highlights how EUR/USD stands out:

Currency Pairs	% of Global FX Volume (Apr 2022)	Typical Spread (Standard/Raw Account)
EUR/USD	~22.7% (Rank #1)	~1.2 pips standard /~0.1 pips raw
USD/JPY	~13.5% (Rank #2)	~1.3 pips standard /~0.3 pips raw
GBP/USD	~9.5% (Rank #3)	~1.3 pips standard / ~0.2 pips raw
USD/CAD	~5.5% (Rank #5)	~1.2 pips standard / ~0.07 pips raw
Gold (XAU/USD)	Commodity	~25–30 cents spread (equivalent to ~25-30 pips) on many brokers (higher volatility instrument)

Key takeaway:

EUR/USD’s unparalleled liquidity and tight spreads make it cost-effective to trade. It’s influenced by big-picture economic forces, which means abundant analysis is available. All these factors contribute to why EUR/USD is often the first choice for traders entering the forex market.

Historical Trends of EUR/USD Market

 Even though the idea of a single European currency has been around for decades, EUR/USD is a relatively new currency pair to trade, given its history compared to GBP/USD. 

But after the euro’s introduction as a physical tender in 2002, EUR/USD quickly became the foremost currency pair in terms of volume, liquidity, and spreads. 

By pairing the currencies of two global economies, the EUR/USD has inevitably been impacted by all major financial events throughout its relatively short history. Over the last 15 years, there have arguably been three standout moments in history:

2008

Just before the Great Financial Crisis, the dollar sank to an all-time low against the euro in July. The 15-nation euro, at the time, rose to 1.6038. Concerns about the health of the U.S banking sector and economy deepened amid the crumbling housing market. However, the crisis ultimately hit the global economy and the euro, which went into a deep recession. 

2010

The European Debt Crisis began with Greece and Ireland being bailed out and saddled with severe austerity measures due to high government debt and institutional failures. EUR/USD went on a rollercoaster ride over the next two years, tumbling to a low of 1.1875 in June 2010 ^[9]. 

The pair then rallied less than a year later, as a permanent bailout fund was established. Low growth and high unemployment were key characteristics of the euro in the middle of the “twenty-tens”. 

2022

EUR/USD hit its lowest level in over 20 years amid the Ukraine conflict, which caused an energy crisis and record-high inflation in the Eurozone. Parity was breached for the first time since June 2002 as the currency pair fell 12 out of 14 months to 0.9535 ^[10]. 

But outright fear and gloom about winter blackouts and worse reversed as surging gas prices eased. This saw EUR/USD rebound sharply back towards 1.05, the midway point of its previous 2021-2022 decline ^[11]. 

EUR/USD Prediction

Forecasting the EUR/USD exchange rate is a complex endeavour that requires careful consideration of economic indicators, central bank policy decisions, and global market dynamics. Analysts draw on historical trends and current fiscal data to inform their projections, understanding that the interplay between the Eurozone and the United States’ economic health is pivotal. 

With the European Central Bank and the Federal Reserve steering monetary policies, each interest rate announcement or fiscal adjustment can send ripples through the currency markets.

The post-pandemic recovery path and geopolitical developments also shape the currency pair’s trajectory. It’s essential to recognise that, while predictions are based on thorough analysis, the currency market remains subject to unpredictable events that can alter forecasted results.

What Moves the EUR/USD exchange rate?

Being a mix of two major global economies means a multitude of different factors drive EUR/USD. Five of the most important include:

The U.S Federal Reserve

The world’s foremost central bank dictates price action across all major financial markets, especially EUR/USD. It meets eight times a year to decide on monetary policy, such as raising interest rates. Markets will also watch out for speeches by the Fed Chairperson and numerous other officials between meetings. 

The European Central Bank

The ECB also currently meets eight times per year, approximately every six weeks, to discuss and set monetary policy. Like the Fed, the ECB issues a prepared statement ahead of a press conference chaired by the President of the ECB Governing Council. 

U.S Non-Farm Payrolls Report

This marquee risk event usually occurs on the first Friday of each month. The report includes a headline job-gains or losses figure, the unemployment rate, and annual and monthly wage growth figures. The data is a key gauge of how the world’s biggest economy is faring. 

Other Economic Indicators

Several other essential data points can significantly impact EUR/USD. These include inflation figures and activity reports, such as retail sales and business surveys. 

Geopolitical Events

Relations between countries, such as U.S.-China tensions, can have a major impact on the world’s most traded currency pair. Wars, economic hostilities, and market uncertainty from time to time propel the US dollar to the status of the premier global reserve currency. 

EUR/USD Correlations

The correlation between the EUR/USD pair and various financial products is significant for traders, as it can influence strategies and risk management. Understanding these correlations can help predict the pair’s movements based on the performance of correlated assets, including commodities, stocks, bonds, and other currencies.

Positive Correlations

1. Gold

Gold often exhibits a positive correlation with the EUR/USD pair due to the euro’s role in the pairing and its influence on global gold pricing relative to the dollar. When the euro strengthens against the dollar, gold prices in USD tend to rise, reflecting a potential uptick in EUR/USD rates as investors seek a hedge against USD inflation and currency depreciation.

2. Euro Stoxx 50 index

European equities, particularly the Euro Stoxx 50 index, typically share a positive correlation with EUR/USD. As European equities rise, indicating economic optimism in the Eurozone, the euro often appreciates against the dollar. Consequently, an uptrend in this index could suggest a concurrent strengthening of the EUR/USD currency pair.

3. European government bonds

The European government bonds, especially German Bunds, tend to move in tandem with EUR/USD. A declining yield environment in the Eurozone often results in a stronger euro, as it can reflect accommodative monetary policies that tend to support EUR/USD price movements over time.

Negative Correlations

1. US Treasury yields

US Treasury yields typically move inversely to the EUR/USD pair. As yields on Treasuries rise, signalling stronger demand for USD-denominated assets, the EUR/USD often declines as the stronger dollar outperforms the euro.

2. USD/CHF

The USD/CHF (U.S. Dollar/Swiss Franc) currency pair often exhibits a negative correlation with EUR/USD. When the USD/CHF pair climbs, signalling a strengthening dollar against the Swiss franc, the EUR/USD tends to decline as the simultaneous dollar strength harms the euro.

3. Commodities (USD priced)

Commodities priced in USD, such as crude oil, can have a negative correlation with EUR/USD. When the prices of such commodities increase, it can bolster the USD as a commodity currency, often leading to a depreciation in the EUR/USD exchange rate due to the increased demand for dollars to purchase these commodities globally.

How to Trade EUR/USD

There are many trading ways to choose from when buying and selling EUR/USD. Often, the most feasible ones will depend on your trading style and personality, and are drawn from either fundamental or technical analysis, or a combination of the two.

Fundamental Analysis

In simple terms, fundamentals focus on “the why”: why is EUR/USD moving? In terms of economic, political, and sentiment factors. This type of analysis often requires some knowledge of markets to form sustainable trading views.

Technical Analysis 

This is interested in the “what” which relates to the study of prices and trends on charts. Price action is analysed to determine current and future trading conditions in EUR/USD. Identifying recognisable patterns helps traders find entry and exit points in the live market.

This approach often employs a variety of technical indicators, such as moving averages, the Relative Strength Index (RSI), Bollinger Bands, the Moving Average Convergence/Divergence (MACD) indicator, and Fibonacci retracement levels, each providing unique insights into volatility, momentum, and potential support and resistance levels.

Risk Management

Risk Management is another critical component of trading EUR/USD, as it is with any currency pair. It involves setting predefined limits on the amount of funds to trade and setting stop-loss orders to protect your funds from significant losses. 

By employing prudent risk management techniques, such as proper position sizing and using leverage wisely, traders can aim to make consistent gains while reducing the potential for losses. Whether you prefer a fundamental or technical analysis approach, or a blend of both, incorporating effective risk management is essential for navigating the complexities of trading EUR/USD.

EUR/USD Trading Strategies

Before going into individual strategy, let’s talk about going short and long on EUR/USD:

What it means to short EUR/USD

Shorting EUR/USD involves taking a position that profits from a decline in the euro’s value relative to the US dollar. When a trader shorts EUR/USD, they intend to sell euros with the intention of repurchasing them at a lower price in the future. This is done in anticipation of a downward movement in the exchange rate. If the exchange rate does indeed fall, the trader can buy back the euros at a cheaper rate, thus making a return on the difference.

What it means to long EUR/USD

A long EUR/USD position means a trader is buying euros and selling US dollars, expecting the euro to appreciate against the dollar. When a trader enters a long position, they do so with the view that the EUR/USD exchange rate will rise. For instance, if the exchange rate rises after the initial purchase of euros, the trader can sell them at a higher price, securing a profit on the trade. 

Specific Trading Strategies for EUR/USD

• Day Trading
  This short-term strategy means traders don’t hold any positions overnight; they enter and exit all orders within the trading day. This means that typically, traders have a large number of positions for small profits. 

• Position Trading
  Position trading is a longer-term strategy that usually involves fundamental analysis to generate trade ideas on EUR/USD. Short-term market fluctuations are less significant, and traders will likely have only a few trades open at higher values.

• Swing Trading
  This strategy uses technical analysis to capitalise on short- to medium-term movements in the EUR/USD market. Like both day and position traders, traders look to identify intermediate market trends.

• Sentiment Trading
  Sentiment trading in the EUR/USD pair involves analysing the market’s overall sentiment. Traders use various indicators and surveys, such as the Commitment of Traders (COT) report and consumer confidence indices, to gauge whether market participants are bullish or bearish on the Euro or the US Dollar.

• News Trading
  News trading is all about staying up to date with market news and trends. This strategy requires traders to make trades based on how they think the EUR/USD pair will react to real-time news events. For example, if a report shows the Eurozone economy is doing better than expected, traders might buy Euros, expecting the price to rise.

Discover which trading strategy is best for you by gaining a better understanding of position trading vs. swing trading here.

Best Time to Trade EUR/USD in South Africa

For traders interested in the EUR/USD currency pair, the optimal trading window is often when the London and New York sessions overlap. This period is renowned for its heightened volatility and increased trading volume, presenting opportunities to capitalise on price fluctuations. It’s a time when market momentum can pick up swiftly, as traders and financial institutions from both continents are active, making it an ideal time for those looking to capitalise on trends and exchange rate swings.

However, the best time to trade EUR/USD isn’t solely determined by market hours; it also depends on individual trading strategies. For example, long-term traders might find value in less volatile hours, where they can analyse the market without the noise of heavy trading. It’s also crucial for traders to consider economic releases and news events, which can cause sudden volatility in the markets.

Final Thoughts

EUR/USD is the most popular currency pair in the world. Its liquidity and narrow spreads make it attractive to all types of traders. 

Both fundamental and technical analysis can be used to enter and exit positions. The pair is heavily influenced by global factors, which often make headlines. 

Using a defined trading strategy in EUR/USD helps you stay consistent, control your emotions, and manage your risk. These elements are key to long-term success when trading EUR/USD. 

Ready to observe earnings patterns in real market conditions? Sign up for a free live trading account to access real-time EUR/USD data.

FAQs for EUR/USD Trading

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