EUR to USD trading
EUR/USD, also known simply as the ‘Euro,’ is the most traded currency pair in the world, representing the euro and the United States dollar.
This pair is central to the global forex market and serves as a benchmark for economic strength between the US and Europe.
In this pair, the euro is the base currency and the US dollar is the quote currency. Going long on EUR/USD means you are buying euros and selling US dollars.
When you see the quote price, it represents how many US dollars are required to buy one euro. For example, a quote price of 1.10 means you would need USD $1.10 to buy one euro.
Popularity and characteristics
As the most liquid pair, EUR/USD attracts a wide range of traders and is known for tight spreads. Its liquidity makes it ideal for both short-term strategies, such as scalping, and longer-term trend trading.
Main influences
The EUR/USD is influenced by interest rate differentials between the European Central Bank (ECB) and the U.S. Federal Reserve, as well as economic data from both regions.
Political events in the Eurozone, such as elections or policy changes, also have a significant impact on the movement of this pair. Additionally, global risk sentiment often affects the euro’s performance against the US dollar.
What are the main economic news events that move the price of EUR/USD?
- ECB interest rate decisions and monetary policy
- U.S. Federal Reserve announcements and interest rate changes
- Eurozone GDP, inflation and employment data
- US economic reports, including Non-farm Payrolls (NFP) and retail sales
- Geopolitical developments in the Eurozone and US–European trade relations
What are the best times to trade EUR/USD?
Global forex trading hours explained
UTC (Coordinated Universal Time) and GMT (Greenwich Mean Time) are time standards often used interchangeably in forex trading to reference trading hours, economic events and session overlaps.
While they are very similar, there are subtle differences that traders need to understand.
Key differences
- UTC: This is a time standard based on the atomic clock. It does not observe daylight saving time (DST) and remains consistent year-round
- GMT: This is a time zone based on the earth’s rotation, based around the Prime Meridian in Greenwich, England. It is technically the same as UTC in standard time, but it differs during daylight saving hours in some regions
Differences between UTC and GMT during daylight saving time (DST)
- UTC: Always remains constant, as it is not affected by DST
- GMT: While traditionally not affected by DST, many trading platforms and countries use the term ‘GMT’ loosely to refer to time zones that do shift during daylight saving months
For example, the UK switches to British Summer Time (BST) at 1.00am GMT on the last Sunday of March, when clocks move forward one hour. Clocks are turned back one hour on the last Sunday of October
Time standards in forex trading
- UTC: This time standard is now favoured for its consistency, making it easier to track trading sessions and economic events without adjusting for seasonal changes. Most brokers and economic calendars use UTC for clarity
- GMT: This standard is still widely used, especially by UK-based forex brokers. However, confusion can arise during daylight saving months of the year, particularly when referencing times in regions that observe seasonal changes
Why time standards matter in forex trading
Trading session overlaps
Understanding UTC and GMT is crucial for identifying when trading sessions (e.g. London, New York, Tokyo) overlap. For instance:
- The London (European session) typically runs from 8.00am to 4.00pm GMT (or 8.00am to 4.00pm UTC)
- However, during DST in the UK, the session is often referred to as 9.00am to 5.00pm BST, which can be confusing
Economic events
Forex traders rely on economic calendars to track announcements like interest rate decisions or employment data.
These are often listed in UTC or GMT, and it’s essential to know which time standard is being used, to avoid being caught unaware or missing important events.
Broker server times
Some brokers (like MarketMates) use UTC to standardise their platform times, while others use GMT or even local times (e.g. New York time). Knowing the difference helps traders synchronise their trading habits with relevant market hours.
What factors should I consider before trading EUR/USD?
Like other major forex pairs, EUR/USD is influenced by numerous factors, ranging from economic indicators to geopolitical developments. Understanding these influences can help you make better trading decisions.
Market volatility
- Moderate volatility: EUR/USD tends to be less volatile compared to pairs like GBP/JPY but still offers sufficient movement for trading opportunities. This makes it suitable for traders who prefer a balance between risk and predictability
Trading hours
- London session (8.00am to 4.00pm GMT): The London session drives significant activity in EUR/USD due to the overlap with the European market
- London–New York overlap (1.00pm to 4.00pm GMT): This is the most active and volatile period for EUR/USD, offering excellent opportunities for traders
Economic news and events
- Eurozone data:
- ECB decisions, inflation reports and GDP releases are major market movers
- Events such as political changes in key Eurozone countries can also affect the pair
- US data:
- Federal Reserve interest rate decisions, NFP data and US inflation reports significantly impact EUR/USD movements
Liquidity
- High liquidity: EUR/USD benefits from immense trading volume, resulting in tight spreads and minimal slippage. This makes it ideal for both retail and institutional traders
Correlations
- Economic and market trends: EUR/USD often correlates inversely with the U.S. Dollar Index (DXY). A strong DXY typically results in a weaker EUR/USD and vice versa
Spreads and costs
- Lower costs: As a major currency pair, EUR/USD typically offers the tightest spreads, reducing transaction costs for traders
Geopolitical developments
- European Union stability: Political changes, trade agreements or disputes within the EU can affect the euro’s strength against the US dollar
- Global risk sentiment: As a major pair, EUR/USD often reflects global economic trends and investor sentiment
Your chosen trading strategy
- Short-term trading: Scalpers and day traders can benefit from the pair’s frequent price movements, especially during high-liquidity periods
- Long-term trading: Macro trends, such as interest rate differentials between the ECB and the U.S. Federal Reserve, provide opportunities for position traders
Final trading tip
To trade EUR/USD effectively, focus on key trading hours, monitor economic news from both the Eurozone and the US, and take note of major geopolitical factors affecting trade relations between Europe and the US. Align your strategy with the pair’s liquidity and volatility characteristics to maximise your chances of trading success.
Benefits of trading EUR/USD
- Most liquid pair: EUR/USD is the most traded currency pair in the world, offering deep liquidity and tight spreads, ideal for all types of traders
- Tight spreads: High liquidity results in consistently low spreads, reducing trading costs, especially for short-term traders like scalpers
- Economic strength indicator: EUR/USD acts as a benchmark for the relative economic strength of the Eurozone and the US, providing opportunities for traders based on economic data
Strong response to economic data
The pair reacts strongly to key economic releases, such as inflation reports, employment data and central bank meetings
Wide trading window
The pair is active during both European and US sessions, ensuring continuous global trading opportunities
Low volatility
While the EUR/USD can experience sharp moves, it generally has lower volatility than other pairs, making it a stable choice for risk-averse traders
Frequently asked questions
24-hour market
Unlike other financial markets, the forex market operates 24 hours a day, five days a week, allowing you to trade at any time that suits you, regardless of your location
Trade long or short
With forex trading,you have the flexibility to profit in both rising (long) and falling (short) markets, giving you more opportunities to make profitable trades
Diverse trading opportunities
With a wide range of currency pairs to choose from, you’ll be able to find trading opportunities in most economic conditions and market types
Access to leverage
Let your trading benefit from high leverage opportunities, allowing you to control a larger position with a smaller capital investment, potentially increasing your profits
How much margin is available to trade EUR/USD with MarketMates?
Trading EUR/USD requires you to have 1% margin in your trading account when trading with MarketMates.
What does it mean to be long or short EUR/USD?
- Being long EUR/USD means you are buying euros (EUR) and selling US dollars, expecting the euro to appreciate against the dollar.
- Being short EUR/USD means you are selling euros and buying US dollars, expecting the euro to weaken.
What is the meaning of base currency and quote currency?
The base currency is EUR (euro), and the quote currency is USD (US dollar).
The price of the pair shows how many US dollars (quote currency) are needed to buy one euro (base currency).
Why MarketMates?
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EUR/USD Chart
A powerful chart for you to use with all the customisable options you’d expect from TradingView.
Change the ticker, the time view, the type of chart you wish to view, and then add your favourite indicators.
Forex Market Data
This market data list provides a broad overview of forex market performance for the major pairs, including value, change, change percent, open, high, low and previous values.
Forex Heat Map
Find out where the big movements are happening with this heat map showing you where all the action is in today’s market.
See all the movers and shakers for a birds-eye view of current forex price action.
Spot strong and weak currencies and see how they compare to each other all in real time.
Forex Cross Rates
See real-time live quotes of selected currencies in comparison to other major forex pairs.
Forex Market Screener
Get all the information you need about your favourite pairs using this handy screener tool.
See a clear view of real-time price information, including change and change percent, high and low, plus buy or sell ratings.
You can choose whether to view just the major pairs, or choose the majors, minors or exotics alone.
Filter by many different parameters including:
- Rising and falling pairs
- All-time highs and lows
- New 52-week or monthly highs and lows
- Volatility
- Overbought and oversold
- Outperforming and underperforming SMA50
Forex Market News
Keep track of what’s happening in the forex markets with this daily news summary, filtered to bring you the most important fx market news as it happens.
Use the side slider to scroll down and view more news items.
Economic Calendar
Never miss vital upcoming economic events with this useful events calendar. See all the events and announcements you need to know, with the ability to set up filters for:
- Event importance
- Affected currencies
