EURUSD meaning and best EURUSD trading hours
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EURUSD is a very familiar currency pair in the forex market. The EURUSD pair is known to be the most traded currency pair globally. This article helps traders know the EURUSD meaning, the factors that affect the rate of this currency pair, and the best EURUSD trading hours.
What is EURUSD? EURUSD meaning
EURUSD is a currency pair between the Euro against the US Dollar. The EURUSD pair indicates how many US dollars (the quote currency) are needed to buy one Euro (the base currency) in the Forex market. In other words, trading the EURUSD pair means trading the rate of the Euro.
For example, the EURUSD rate is 1.13, which means that to buy 1 EUR, the trader has to use 1.13 USD, or 1 EUR is equal to 1.13 USD.
Since EURUSD is the world’s most traded currency, it is also the most liquid currency pair with the lowest spreads.
What do the EURUSD rate increase and decrease mean?
Like other currency pairs on the forex market, the EURUS rate changes constantly. A change in the EURUSD pair rate represents the changing correlation between the two currencies in the pair.
E.g.:
- When the price of EURUSD increases (for example, from 1.15 to 1.17), the EUR will increase in its value relative to the USD.
- When the price of EURUSD falls (for example, from 1.22 to 1.19), the EUR depreciates, and the USD increases in value.
The base currency (EUR) of the EURUSD currency pair is fixed and always represents one unit. Therefore, the EURUSD rate can increase due to the strengthening of the EUR or the weakening of the USD. Either of the two conditions leads to the EURUSD rate rising and showing up in the price chart.
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Factors affecting the EURUSD exchange rate
The EURUSD currency pair is an exchange rate representation of two currencies, the Euro and the US Dollar. Therefore, the exchange rate of this currency pair is influenced by fundamental factors such as government policy and the economics of supply and demand in the money market for this currency pair.
Interest rates are a factor that directly affects the EURUSD rate. Traders can follow the ECB (European central bank) and the Fed (US Federal Reserve Bank) to capture the exchange rate movements of this currency pair. The Fed publishes the Federal Funds rate eight times a year, while the ECB publishes the monthly rate.
Traders can follow the interest rate statements, the future policy direction of the two most powerful central banks from which to make judgments on the EURUSD rate.
The employment rate also affects the EURUSD rate. In the US, Nonfarm Payrolls data is released by the Bureau of Labor Statistics on the first Friday of every month. Nonfarm Payrolls data provides insights into EURUSD volatility. In Europe, the number of consolidated jobs in the region and that of major economies such as France and Germany also significantly impact the price of the EUR/USD pair.
When is the best time to trade EURUSD?
The foreign exchange market is open 24 hours, five days a week, except Saturday and Sunday. However, it is not always the right time to trade any currency pair. Traders should only enter trades at the time when there are the most participants in the market.
The EURUSD pair is most actively traded when the London or New York markets are open. That time is about 8 AM to 9 PM GMT. Moreover, the ideal trading time of the EURUSD pair is from 1 PM to 4 PM GMT. This is the time when the London and New York markets are open.
See the forex market trading session in different time zones here.
The London and New York markets are open at the same time. As a result, the trading volume will be aggregated from the world’s two largest markets and become the time of the day with the highest volume. That means the EURUSD pair will be most actively traded during this time, and this is the best time for traders to look for opportunities.
Conclusion: EURUSD meaning
Above is some basic information to learn EURUSD meaning. Hopefully, with this information, traders can easily access and gain initial experience to practice trading and make profits from EURUSD.
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