Euro is the relatively new currency first introduced by the European Union in 1999.The currency has been adopted by the 16 countries of Europe. They are collectively known as Euro zone.

The EUR/USD is the most widely traded pair in Forex. Both the currencies are powerful currencies. The dynamism and high trading volumes of the two currencies make them very liquid, creating greater opportunities of profit by trading them. Oil is bought and sold in Dollars. Thus heavy trading of dollars takes place through out the world. The euro and dollar are the only currencies, which largely traded.

The movement of the currency pair rests on the following factors:

• Economic performance

The individual economies of both the currencies cast an influence on them. If USA witnesses higher economic prosperity than European Union, the dollar becomes stronger, if vice versa, the Euro strengthens. Interest rates, balance of trade etc are the key indicators governing the rates of the currency. It the interest rates are higher in America, the dollar becomes more expensive against the Euro.

• Political Stability

He recent times have seen lot of political instability among the countries that are the members of European Union. Political conditions are the deciding factors of monetary and financial reforms in the country. There has not been complete peace among the various countries, leading to decreasing rate of euro.

Trading of EUR/USD pair, trade regularly hedge. Hedging is done to minimize the risk. There is a high risk involved due to the high volatility.

The currency pair leaves no room for arbitrage. It is because here are no pricing fluctuations. Any deviations in the market are quickly rectified.

There is less of a difference between bid ask prices. Bid ask spread is low. This lowers the risks of the traders. Therefore the euro dollar currency pair is traded more than the other currencies in the forex.

Currency trading market, though the biggest and largest financial market in the world, is extremely volatile and fluid in nature. US dollar, still remains the undisputed currency in the Foreign exchange market, though it would not be wrong to say that unless we see a substantial spurt in the economy of the US, things might change in the near future. Last two quarters have shown a remarkable improvement (positive growth have been reported from various sectors) as far as the US economy is concerned. It was therefore not surprising to note that Euro hit it’s seven month low in comparison to the US dollar. The euro closed at 1.3827 and this in more ways than one gives away the story of the volatility of Euro. It becomes pretty clear and understandable when we refer to the figures of the bidding price and asking price of the Euro in comparison to the US dollar it is as follows 1.3715 and 1.3719, respectively, as of now.

There are various factors attached to the downturn of euro and one of the primary factors is the positive growth of the US economy, in the last two quarters. Add to this the worsening economic situation of the countries like Portugal and Spain. This is adding a lot of pressure on the euro and hence the beneficiary is undoubtedly the US dollar. Even the political condition in some of the countries, using euro, is not very conducive and therefore many analysts are keeping a very close watch on their political situation and stability. Another major reason for the seven month low of euro against the US dollar is the fact that German economy is still not showing major signs of recovery, this again puts a lot of pressure on the euro. If we see the overall, political as well as the economic condition of the European countries, it seems that euro will take a lot of time to bounce back against the US dollar.

A lot will depend on the decisions taken by and policies implemented by the European Central Bank, most of the analysts are very eagerly waiting for the decisions and hence the implementation of the policies. A lot will depend on this (European Central Bank meeting) if the euro has to rally against the US dollar.

The dollar strengthened, consolidating after broad selling on the back of data showing strong US growth, gaining over a cent on the single currency.

• Equities took a sharp downturn at the end of last week, having rallied after the positive US GDP data, most likely as a result of end of month profit taking, which buoyed demand for the greenback.
• Data also showed that US consumer spending fell for the first time in five months in September, coinciding with the end of the government’s car scrappage scheme.
• The US Commerce Department says spending dropped 0.5% in September, compared with a 1.4% rise in August, which encouraged investors to buy back into the haven currency.
• The US dollar extended gains in the afternoon, pushing the euro down near three-week lows after data showed that a US Midwest manufacturing index was stronger-than-expected failed to heighten risk appetite.
• The euro has climbed in trading this morning with the price currently hovering around the mid 1.47 mark.

The dollar rose against the single currency for a third consecutive day in its longest advance since August, as a report showed US consumer confidence fell this month.

• The euro struggled in trading yesterday after data showed that public sector lending in the eurozone declined by 0.3% in September compared to this period last year.
• The figure raises concern that there are still few signs that the ECB’s unlimited provision of liquidity to banks is prompting any pick up in eurozone broad money lending, which could put pressure on the single currency.
• The euro then continued to slide, after data revealed that US consumer confidence unexpectedly fell in October as fears about future job prospects increasingly preyed upon the American public.
• The index fell to 47.7 from 53.4 in September, disappointing market expectations of a rise and spurring a return to perceived safety of the greenback.
• In addition, traders noted that as the single currency breached a key technical level at $1.4850, stop-losses were triggered, which pushed the single-currency to a two-week low of $1.4773.

The single currency resumed its upward march against the greenback yesterday, finally broaching the 1.50 mark, to close up half a cent at 1.5015.

• In early trading, the euro retreated from near 14-month highs as some investors bet European policy makers would say they are still concerned that the euro’s strength will harm the economic recovery.
• Analysts also said that the single currency’s sharp fall against the pound weighed on the euro/dollar price, which has recently remained anchored just below the $1.50 level.
• However, the dollar relinquished its gains in the afternoon as rising U.S. equities encouraged enough risk appetite to push the single currency to the highest level since last August.
• In trading this morning, the single currency has once again slipped back as solid data from China gave traders a reason to take profits.
• Analysts have noted, though, that the dollar is likely to continue to broadly weaken as sentiment towards the US currency remains downbeat on the prospect of sustained low US interest rates.

The single currency pushed higher once again as the greenback suffered from rising appetite in the wake of positive economic signs.

• The dollar initially made after ECB President Trichet said that the US government and the Federal Reserve should pursue policies supporting a strong dollar and that excessive foreign-exchange volatility is an “enemy.”
• However the euro trimmed its losses in the afternoon following positive US data, which bolstered expectations that the economy is recovering.
• US jobless claims beat market forecasts dropping a further 10K week-on-week. The US CPI figure also rose marginally to 0.2%, supporting growing optimism over the economic recovery.
• The greenback also suffered after both Goldman Sachs and Citigroup reported better-than-expected earnings in the third quarter.
• Goldman Sachs posted a net income of $5.25 a share, compared with the average estimate of $4.18 a share, and profits for the period were $3.19bn, a four-fold increase from the same period in 2008.
• In trading this morning the euro has slipped back slightly but the price remains at near 14-month highs, hovering just above 1.49.

The single currency recovered some of the losses it incurred on Friday, gaining over half a cent against the greenback as risk appetite in the market strengthened.

• Rallying equities yesterday, which have been boosted by stronger commodity prices and optimism about the US corporate earnings season, also buoyed support for the euro, allowing it to briefly trade over 1.48.
• Analysts also noted that while in other nations future policy remains hazy, the single currency benefited from a clearer outlook for monetary policy in the eurozone.
• Additionally, comments from the president of the St Louis Federal Reserve that the US economy faced risks from rising inflation, stoked speculation that US interest rates might rise sooner than had been expected, but investors remained bold in their exposure to risk, continuing to sell the dollar.
• This morning, the pairing is trading relatively steadily around yesterday’s closing price, although the euro is likely to find support from a German economic sentiment survey, released today at 10:00BST.
• In the US, investors await figures on the Federal Budget Balance, however the exact time of the release is unknown.

The single currency made strong gains yesterday as the dollar came under pressure about its future status as the chief currency used in oil trades.

• The single currency broached two week highs as a report came through that Arab States were in secret discussion to find alternatives to using the dollar in oil trades.
• Major oil-producing countries have denied the report, but markets reacted strongly to the news, which has added fuel to arguments that the US currency’s global status is coming under pressure.
• Analysts noted that the dollar’s sharp fall was a good example of poor sentiment toward the US currency being vulnerable to speculative selling.
• Rallying equity markets encouraged further dollar selling, with risk appetite in the market diminishing the appeal of the haven currency.
• Risk was also high following the Reserve Bank of Australia’s relatively unexpected rate hike, which spurred demand for high-yielding assets, lending support to an upward movement in the euro/dollar price.

The single currency shrugged off worse-than-expected US non-farm payrolls data to post gains, closing up 0.2% at 1.4574.

• Date revealed that the US economy lost 263,000 jobs in September, which was more than had been expected, according to official non-farm payrolls figures.
• The Labor Department revealed that US unemployment rate rose to 9.8%, fueling fears that the labour market could undermine economic recovery.
• The euro initially dropped sharply to a three-week low of 1.4485 on the release of the U.S. payrolls report, as investors were encouraged to the relative safety of the greenback.
• However, dollar gains were modest, and the single currency was able to rebound strongly, climbing near $1.46, as analysts suggested caution in buying the US currency amid signs that the recovery could stall.
• Analysts noted that trading is often volatile following the highly anticipated US monthly jobs data.
• The dollar has fallen against the euro today, losing 0.3%, after the G7 finance chiefs refrained from calling for measures to stop the U.S. currency’s decline.

If you are new into the Forex trading and want to gain some quick knowledge on the Forex trading then in that case here are some basics to help people like you. The Forex market is somewhat different than other markets and one need not open for the market to open. The reason being somewhere on the globe its morning and thus the market is in swing there, unlike the stock market so you have a 24/7 exposure to the market. Under mentioned are some of the market timings.

Tokyo

• Open – 23:00 (GMT)
• Close – 8:00 (GMT)

London

• Open – 7:00 (GMT)
• Close – 16:00 (GMT)

New York

• Open – 12:00 (GMT)
• Close – 21:00 (GMT)

The real tempting fact related to the Forex market is that as per the Central Bank Survey, that was conducted to compute the number of total international settlements closed. It was 1.9 trillion in 2004. To give you an idea of how big this is, I would say this daily volume is more than 20 times the stock trading volumes at the NYSE and the NASDAQ combined.

If you still do not think that Forex trade is not lucrative enough then, the facts that you would be able to short sell a currency pair without waiting for the up ticks to happen. And with Forex trading you have all the liberty on earth to short or long sell the currency pair at free will. As there are no exchange guided norms for the daily activities related to Forex trading. As there are guidelines, in the case of the stock trading, should do the magic. Talking of pairs it’s absolutely important that you have some idea about the currencies and the pairs.

The Forex currency quotes are as follows:

US Dollar – USD;  Euro – EUR;  British Pound – GBP;  Japanese Yen – JPY; Swiss Franc – CHF;  Canadian Dollar – CAD; Australian Dollar – AUD;  New Zealand   Dollar – NZD.

The Forex currency pairs are as follows:

1. Euro Dollar – EUR/USD
2. Cable – GBP/USD
3. Swissy – USD/CHF
4. Loonie – USD/ CAD
5. Dollar Yen – USD/ JPY
6. Aussie Dollar – AUD/ USD
7. Kiwi Dollar – NZD/ USD

While trading in Forex a standard lot is of 10000 base currencies, but it differs depending on the platform and this standard size is thus not a fixed size. Forex trade would always include a bid and an ask price. Bid price is the price at which the trader is willing to sell and the asking price is the price at which another trader is willing to buy.

The dollar rallied against the single currency yesterday after a run of disappointing manufacturing data left investors unwilling to take on risk.

• The single currency took a sharp downward turn, weighed down by comments from a top European official who expressed concern about the value of the euro.
• He said that European finance ministers would discuss the single currency’s recent appreciation at the G7 meeting this weekend.
• Waning risk appetite amid a mixed batch of US economic data also prompted investors to seek the perceived safety of the greenback.
• Data yesterday showed US initial jobless claims rose in the latest week, a reminder that the labour market is far from stable.
• Additionally, data showed that the eurozone unemployment rate rose to a ten year high of 9.6%, which undermined demand for the currency, bringing it to a two week low of 1.4527.