
In this post, we are going to be analysing the EUR/USD forex pair, focusing on both the macroeconomic perspective and technical charts to provide a
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Find out about forex, the simultaneous exchange of different currencies on the market. Learn more about the largest and most liquid financial market in the world.
Currency trading has soared in popularity this century amongst professional and non-professional traders alike. Before the arrival of the Contract for Difference (CFD) market in the late 1990s, currency trading was an asset class that was difficult for individuals to trade or invest.
Stock and share ownership had been growing throughout the latter 20th century, while ownership of bonds was possible via investment funds. However, currencies had traditionally been the realm of large institutions – unless you were changing up currency for a holiday abroad.
What we now call foreign exchange or currency trading is the interchange of one currency for another, and it is this exchange that separates currency trading from other markets.
When you trade currencies, you are anticipating that one currency will rise or fall relative to another one. Currency trading, therefore, is a “relative value” trade, by which we mean that you look for one currency to appreciate in value and for another currency to fall in value relative to the first.
So, when trading currencies, we need to decide which currency we expect to be rising in value, and which may depreciate in value – relative to one another.
The history of the currency markets can be traced back to ancient Egypt and Greece, and even further back to Biblical times with money changers in the Holy Land. The Middle Ages saw currencies traded between international banks with the Medici family accounting book in the 15th Century. The Gold Standard Monetary System, the post-World War II Bretton Woods System, the Smithsonian Agreement and the Plaza Accord have all been stepping stones throughout the 19th and 20th centuries to the modern era of free-floating exchange rates that we now take for granted.
Today, the currency trading markets are the world’s largest traded asset class, with between $5-7 trillion of transactions each day of the trading week. The major players in these markets include
Between these powerhouses sit individual, professional, and retail traders looking to make a profit.
A multitude of factors drives foreign exchange markets, but there are four main drivers:
The most popular currencies in currency trading are those of the significant global economies where the Foreign Exchange rate is free-floating. These are commonly known as the majors”.
The main currency pairs that make up the majors would be combinations of:
Each of these currencies traded against each other is deemed as the majors, so for example; EURUSD, USDJPY, GBPUSD, USDCHF, USDCAD, AUDUSD and NZDUSD.
Outside of the majors, there are other ways of expressing a view via the currency markets. These would be via cross rates and emerging markets (EM) currencies.
An example of a currency trade
If you had an unfavourable view for the Euro, perhaps because you felt that the Eurozone economy was performing poorly and was going to continue as such, you might look to short the Euro.
You might also have a view that the UK economy was looking healthy and that the short-term data was going to reflect this and beat expectations.
In this case, you would look to express your view by selling the Euro and buying the GB Pound, which would be a short position on the EURGBP currency pair.
Let’s say you sold EURGBP at 0.8500, with a target for a move down to 0.8000. You might then place a stop loss at 0.8700 in case the currency pair moved in the opposite direction.
You can trade a wide variety of different currencies with us, including EURUSD, GBPUSD, USDJPY, EURGBP, GBPCAD, EURSEK, USDMXN, USDZAR.
See the full list here
In this post, we are going to be analysing the EUR/USD forex pair, focusing on both the macroeconomic perspective and technical charts to provide a
Currency crosses or cross rates may be terms you are unfamiliar with, but they simply refer to a transaction between two currencies, of which the
The history of currency markets is a long and complex one, but it is fascinating nonetheless. Currency markets are a pivotal part of the global
Risk Warning
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
70.23% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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