LONDON (PRWEB) July 08, 2019
How does the currency pair trading work in the Forex market? We will try to explain that with the EUR/USD currency pair and its performance in 2019, so far. There are so many currency pairs in the forex market - for example, the EUR/USD, USD/JPY, USD/CAD. However the experts of Capital Way have observed the trend in the forex market and following their reports, the EUR/USD is the most traded currency pair.
The US dollar is the preferred reference in most currency exchange transactions worldwide. It is the dominant reserve currency of the world. The second most traded currency is the Euro. Therefore, a combination of both currencies is highly regarded in the forex market.
However, the fact that these currencies are tied to the United States of America and Europe does not mean there is always an upward trend. No, it fluctuates, and traders watch the movement of this EUR/USD to know how much of one euro is worth in dollars. As with every currency, whatever happens in the economy will affect its demand and supply.
Below are some of the factors affecting the EUR/USD in 2019
1. Economic indicators: Information concerning economic indicators of countries determines the true value of its currency. Such economic indicators can be seen in the figures of the Gross Domestic Product, Consumer Price Index, Unemployment figures, the Prices of crude oil. Economic indicators show the overall health of the economy and the true value of its currency. Therefore, if the report about such indicators is on the positive side, it will encourage traders to trade more on the EUR/USD currency pair. The reverse will be the case if it’s on the low side.
2. Regulatory monetary policies: Another factor that affects the EUR/USD Currency pair is the monetary policy. These are policies made by regulatory bodies like the European Central Bank and the Federal Reserve to control the amount of money in circulation within the economy. Such decisions can either be positive or detrimental to the forex market, depending on the goal of the regulators. A shift in monetary policies can cause a considerable fluctuation in the currency pair. Just one policy can affect the value of both currencies in every way.
3. Political Affairs: Imagine what will happen if the Brexit becomes successful. That means the United Kingdom will pull out from the European Union. Will it weaken the strength of the Euro? Will they have their currency? Questions like this are what will fill the mind of an average investor, and it will affect the EUR/USD currency pair.
How about Trump's Trade war? Investors and traders are carefully following the news on this topic. Other countries are threatening to retaliate, and the prospect of further escalation risk will significantly hamper trade and investment, and possibly the global economy.
As a result of the factors mentioned above, especially as regards the trade tensions, this year has recorded a downturn in the EUR/USD currency pair. Following the analysis of the Capital Way analysts, this trend will continue, and the currency pair will continue on a lower slide since most trading pattern shows that investors believe the Euro will crash.
The US President Donald Trump claims that the US will be in a problematic situation if Euro and other currencies weaken against the dollar. The first half of 2019 is already gone, and the Euro is being traded below its value according to most indices. However, say Capital Way analysts, it’s too early to give up yet; a lot can still happen in the next 180 days. Who knows, there might be a turnaround.
Let’s keep our fingers crossed.
- This Capital Way review does not constitute a recommendation for investment and does not replace professional advice.