|Member Sentiment Bearish|
Live and Historical EUR/USD Rates
The above chart represents the value of the Euro against the dollar - how many dollars are needed to purchase one Euro. At its introduction, the Euro fell against the dollar, but in 2003, the Euro surpassed the value of the dollar. Sometimes called "fiber" because of the transatlantic cable, this is certainly a major pair - the largest in forex trading.
Since its introduction in 1999, the Euro has become the currency of 21 European countries for a total of 327 million people. The Euro holds the highest volume of economic value circulated in any world currency and it is also the second largest reserve currency and second most traded, after the dollar. The Euro is controlled by the European Central Bank (ECB) in Frankfurt, though the bank has not typically exercised significant control. The Euro is strongly impacted by exports, as well as the primary industries in the Eurozone: services, agriculture, and tourism.
The U.S. Dollar
The U.S. dollar is the most common currency in international transactions, used both in the United States and several other countries. A number of currencies are also pegged to the dollar. The value of the dollar is strongly controlled by the Federal Reserve, which makes adjustments primarily through lending interest rates. However, it is a floating currency and value is apparent in consumer price indices or other major measures. The dollar is also the primary reserve currency, though in 2007, Alan Greenspan commented that it is entirely possible that the euro will replace the dollar in this role. Significant sectors in the American economy include energy, agriculture, manufacturing, and finance.
The EUR/USD pair is the most commonly traded major pair. Naturally, any factors that influence either economy affect the pair, as well as the differential between the interest rates at the ECB and Fed. The pair also has a negative correlation against the USD/CHF and a positive correlation with the GBP/USD pair. This is because of a strong positive correlation between the Euro and the Swiss franc or the British pound-a natural correlation given their close economic ties. It is not as common for this pair to be used for carries, since both currencies tend to be relatively stable.
Read about the tag team of Bernanke and Draghi here.
August 17, 2010 at 9:50 AM • Comment
The outlook for the Eurozone underwent some revision as the European Central Bank or ECB released its monthly report for August last week. The results of the report were reflected in the Euro's sell-off against the U.S. Dollar,...Read More
August 16, 2010 at 4:24 PM • Comment
USDJPY gained overall last week as the Greenback recovered some of the previous week's losses, despite having made fresh 15 year lows. The pair started the week on a positive note Monday as the Japanese Current Account came...Read More
August 16, 2010 at 4:21 PM • Comment
USDCAD rallied last week on the back of greater market risk aversion, although also being propelled higher by the general corrective strength shown by the Greenback. The rate began the week near its low point of 1.0253 seen...Read More
August 16, 2010 at 4:18 PM • Comment
The Kiwi was sold off especially strongly last week, as the commodity dollars and the Euro lost favor. The rate initially opened on Monday near its weekly high point of 0.7338, but lacking any important economic data out...Read More
August 16, 2010 at 4:11 PM • Comment
The Euro started near its weekly high of 1.3307 against the Greenback last Monday after the previous Friday's disappointing U.S. Non Farm Payrolls number. Nevertheless, the rate soon started to fall in spite of mostly good numbers seen out...Read More