subject: Forex Trading The Euro Needs Knowledge Combined With Capability [print this page] While we believe that forex trading profitability can often be out of reach for many a trader, the euro tends to be the simple choice for most traders. While the U.S. dollar is the most highly traded currency in forex, the euro remains a close second. There aren't many traders out there that have not traded the EUR/USD currency pair sometime with in their formidable careers.
While its relatively easy to trade the euro, you're going to want to pay attention to certain factors that affect the price of the euro. These key elements will be fundamental in providing you with added knowledge that can give you a leg up over your competition. At the very least, they can help prevent you from being led astray and ending up making some serious mistakes.
While still a very young currency even in 2010's standards, the euro has been chosen by over 16 individual countries as the forex currency to lead their financial policy. Originally launched between 1999-2001, there are total now of 27 nations within the European Union. Five nations continue to use the euro without participating as a member of the European Monetary Union.
There are of course exceptions to EMU countries that are members, but still don't nationally recognize the euro as their own. Britain still uses the pound sterling, notated as GBP within the foreign exchange market. The GBP or British Pound reigns 4th in world in terms of usage in the forex trading marketplace, with the US Dollar, the euro and the Yen ruling the first three positions.
Its of little surprise for someone to learn the Swiss like to remain outside the EU in their own neutral corner and that their markets are traded around the Swiss Franc (CHF). But would we expect anything less than Switzerland to exercise its independence? Unfortunately for the Swiss the euro has risen in value and is a formidable forex trading currency.
fully independent of the EU. The Swiss have not taken steps to join the EU, apparently having no desire to do so. As far back as the Treaty of Paris in the 50's is when the European Union first originated. It was known as the European Economic Community and developed international trade pacts. Its growth excelled to include other countries and continues to open new trading possibilities throughout Europe. Just before the turn of the century, the EMU began the prospect of a multinational currency to serve Europe and tasked the ECB, or the European Central Bank to lead it.
Many are surprised to learn that the majority of the Euro-zone countries are not all that significant in their contribution to the European GDP. Only 4 of the 16 countries contribute more than 75% of the GDP, while the remaining 12 makeup only 25%. Those four are Spain, Italy, Germany and France.
Since the euro has diluted affect when it comes to actual direct economics, the ECB operates more on a level of setting interest rates and maintaining stability among pricing of the euro across member nations. This would be a direct contrast to the US Federal Reserve who has a direct affect on the economy with everything from employment data, non-farm payrolls and even political innuendo. This would then assume that the forex trading rates of the euro would be more stable than the US dollar.
The ECB tends to remain vigilant and likes to maintain a bit more parental control over interest rates. While they may raise interest rates quickly when witnessing rising costs, they also will step back and let them fall at a slower pace than the US and Britain. All of these factors can give an active forex trader something to think about while trading the euro.
