EUR/USD: Comprehensive Trading Guide from Analysis to Strategy

The EUR/USD exchange rate pair represents the two largest economies in the world – the European Union and the United States. It is also the most actively traded currency pair in the Forex market, accounting for over 50% of total volume.

What Is EUR/USD? The Basics You Need to Know

The EUR/USD exchange rate indicates the relationship between the Euro (the common currency of the European Union) and the US dollar. It shows how many USD are needed to buy one EUR in the foreign exchange (Forex) market.

Illustrative examples:

• Scenario 1: If EUR/USD = 1.30 and you have 250 EUR, you can exchange for 325 USD (250 × 1.30 = 325)
• Scenario 2: If EUR/USD = 1.15 and you have 255 USD, you can exchange for approximately 165.65 EUR (255 ÷ 1.15 = 165.65)

Why is EUR/USD important? Because it reflects the economic health of the two leading economic blocs, has extremely high liquidity, and its continuous price fluctuations offer numerous trading opportunities.

Historical Fluctuations of EUR/USD: From Past to Present

The EUR/USD exchange rate pair has experienced many periods of significant volatility. Each month typically records fluctuations of about 77-90 pips, especially since the COVID-19 pandemic.

Key events impacting EUR/USD:

These events show that EUR/USD is never static – each monetary policy decision or geopolitical event can cause turbulence.

Main Factors Influencing EUR/USD

Factors Affecting the Euro

The EUR is influenced by indicators and policies from the European Union:

• European Central Bank (ECB) monetary policy: Interest rate decisions, bond purchase programs (QE)
• Labor market: Employment rates, new hiring in EU countries
• Financial health: Budget deficits, public debt levels of EU members
• Economic growth: Eurozone GDP, especially Germany (the economic engine)
• Structural changes: Expansion or withdrawal from the union
• International policies: Trade, diplomatic relations

( Factors Affecting the US dollar

The US dollar is impacted by economic and political factors in the United States:

• Federal Reserve interest rate policies: Growth rate, monetary tightening
• GDP growth: Overall economic performance of the US
• Labor market: Unemployment rate, monthly employment data
• Fiscal policies: Stimulus packages, government spending
• Public debt & budget deficits: Long-term impact on dollar value
• International trade: Agreements, tariffs, balance of payments
• Political events: Decisions from the White House, leadership changes
• Savings & consumer spending rates: Household economic drivers

Analysis of EUR/USD from 2020-2023

) 2020-2021: Recovery After the Pandemic

After the ECB announced economic support measures in March 2020, EUR/USD began a long-term upward trend from 1.06 to 1.18 – a rise of about 1,200 pips. Optimistic economists believed in Europe’s recovery potential, despite concerns over dependence on tourism.

2022-2023: Multidimensional Pressures

2022 marked a turning point as three main factors hit the market:

1. Ukraine Conflict: The war increased energy and food prices, raising production costs. The EU was more affected than the US due to reliance on Russian oil and gas, causing EUR to weaken.

2. US Inflation: The Fed accelerated rate hikes to combat inflation, making USD more attractive.

3. China’s Zero-COVID Policy: Paralyzes China’s economy – the EU’s second-largest trading partner, impacting European growth at multiple levels.

Result: EUR/USD declined sharply during this period, reflecting the EU economy’s relative weakness compared to the US.

EUR/USD Monthly & Yearly Forecast ###2022###

( June 2022

• Opening Price: 1.064 USD
• High/Low: 1.085 / 1.053
• Monthly Average: 1.068
• End of Month Forecast: 1.069
• Expected Change: +0.5%

) July 2022

• Opening Price: 1.069 USD
• High/Low: 1.069 / 1.021
• Monthly Average: 1.059
• End of Month Forecast: 1.037
• Expected Change: -3.0%

August 2022

• Opening Price: 1.037 USD
• High/Low: 1.038 / 1.008
• Monthly Average: 1.027
• End of Month Forecast: 1.023
• Expected Change: -1.4%

September 2022

• Opening Price: 1.023 USD
• High/Low: 1.037 / 1.007
• Monthly Average: 1.022
• End of Month Forecast: 1.022
• Expected Change: -0.1%

October 2022

• Opening Price: 1.022 USD
• High/Low: 1.024 / 0.994
• Monthly Average: 1.012
• End of Month Forecast: 1.009
• Expected Change: -1.3%

Effective EUR/USD Trading Strategies

With high liquidity and constant volatility, EUR/USD is ideal for various strategies. Traders can choose two main approaches:

Strategy 1: Fundamental Analysis###

Instead of relying solely on price charts, this strategy focuses on economic reports and policy decisions. There are three approaches:

A. Proactive Strategy ###Proactive(

• Traders position themselves about 20 minutes before major data releases
• Predict outcomes and take Long/Short positions based on personal expectations
• Higher risk but potentially higher profits

B. Reactive Strategy )Reactive(

• No prediction, only act after data release
• Compare actual results with market expectations
• Less risky but with smaller profit opportunities

C. Hybrid Strategy )Hybrid(

• Combine both methods to optimize risk/reward ratio
• Favored by experienced traders

) Strategy 2: Technical Analysis(

This method uses price charts, trend lines, and technical indicators:

• Parabolic SAR )Stop and Reverse###: Identifies trend reversal points
• MACD (Moving Average Convergence Divergence): Measures momentum and trend strength
• Moving Averages (Moving Averages): Determines long-term trend
• Support & Resistance Levels: Identifies key price zones

This approach requires traders to:

• Master analysis tools
• Filter out false signals or noise
• Gain experience over time

Optimal Trading Hours for EUR/USD

Golden hours (20:00-23:00 Vietnam time):

• Both European and American markets active
• Highest liquidity & volatility (around 25-30 pips)
• Ideal for traders seeking big opportunities

Secondary hours (15:00-18:00 Vietnam time):

• European session opening, initial momentum
• Volatility around 22-25 pips
• Suitable for those preferring lower risk trading

Daily fluctuation patterns:

• Thursday: Most active (up to 90 pips) – many economic reports
• Wednesday & Friday: Moderate (around 78 pips)
• Monday: Quietest (around 60 pips) – fewer major data releases

Getting Started with EUR/USD Trading

To participate in EUR/USD trading, you need:

1. Choose a reputable Forex broker – Select a licensed company from a trusted regulatory authority
2. Open an account – You can start with a demo account (without real money) to learn
3. Find EUR/USD on your trading platform
4. Decide on direction: Go Long (buy) if you expect EUR to rise or Short (sell) if you expect decline
5. Place an order: Select contract size, entry price
6. Manage risk: Always set Stop Loss and Take Profit to protect your capital

Helpful tip: Always set automatic take-profit levels to save time monitoring and reduce emotional trading risks.

Other Major Currency Pairs in Forex

Besides EUR/USD, traders can also trade other major currency pairs:

With USD as the quote currency:

• USD/JPY (US dollar / Japanese Yen)
• USD/CHF (US dollar / Swiss Franc)
• USD/CAD (US dollar / Canadian dollar)

With USD as the base currency:

• GBP/USD (British Pound / US dollar)
• AUD/USD (Australian Dollar / US dollar)
• NZD/USD (New Zealand Dollar / US dollar)

These currency pairs have correlations with EUR/USD, which can help you increase profits or reduce risks through diversification.

Conclusion

EUR/USD offers significant trading opportunities but also involves corresponding risks. Understanding the influencing factors, historical volatility, and trading strategies is the first step toward success in Forex.

Whether you are a beginner or experienced trader, the most important things are:

• Continuous learning from past trades
• Starting with demo trading before real money
• Disciplined risk management
• Never trade under emotional pressure

The world of EUR/USD trading awaits smart traders. Step in with solid knowledge and high discipline.