EUR/USD
The EUR/USD (euro/United States dollar) is the most popular currency pair in
the world, representing the economies of the European Union and the United States respectively.
Trading the EUR/USD currency pair is also known as trading the "euro".
The euro ('shared' or 'single' currency) was introduced in the 19-member European Union in 1999.
Since its introduction, the currency pair has
experienced considerable volatility as the
world has faced multiple events such as the tech boom
becoming the tech bust, the real estate bubble, and the European Debt
Crisis which is still seeking long-term
resolution.
The pair is affected by factors impacting the value of the
euro and/or the dollar (or 'greenback') in relation to each other and to other
currencies. For this reason, the interest rate differential between the European Central Bank (ECB) and the Federal Reserve
(Fed) will affect the value of these currencies when compared to each
other.
When the U.S. central bank intervenes in open market activities to make the dollar stronger, for example, the value of the EUR/USD cross could dip, due to a strengthening of the greenback compared to the shared currency.
The EUR/USD tends to have a negative correlation with the USD/CHF and a positive correlation to the GBP/USD currency pairs. This is due to the positive correlation of the euro, the Swiss franc and the British pound.
