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EUR/USD

The EUR/USD is the most heavily traded currency pair in the market, contributing 24% to the daily forex trades made in the OTC market in 2019. This particular currency pair represents two of the worlds largest economies - the European market and the U.S., therefore, making it the currency pair with the tightest spreads due to its high liquidity. Traders will prefer this, as they can hope to maximise any profits made by trading large volumes without making a massive impact on the market. The EUR/USD is affected by a number of factors including ECB interest rates and the decisions made by the Federal Reserve. Traders are most likely to keep a close eye on monetary policy this is because a higher interest rate on certain currencies will provoke an influx of demand. For example, if the Fed were to set higher interest rates than the ECB, this will cause the dollar to appreciate in value compared to the Euro.

 

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