Although the euro began circulation only in 2002, the EUR/USD pair has quickly become the most widely-traded financial instrument in the world. This is due to the fact that the currencies of the pair represent two major economies of the world.
The EUR/USD rate is influenced by multiple factors, including interest rates in the EU and the U.S. For example, when the ECB (European Central Bank) intervenes in open market activities with the aim of making the euro weaker, the EUR/USD rate could decline due to the U.S. dollar being stronger compared to the euro.
Other factors affecting the EUR/USD rate include employment rates, budget deficits, international and domestic policies, economic growth of the Eurozone and the GDP growth and unemployment rates, money supply, trade agreements and "trade wars", total national debt and household income rate in the United States.
Various geopolitical uncertainties affecting both the EU and the U.S. play a major role in the price movements of EUR/USD. As for the EU, the economic factors include those coming from any of its member countries. Investors and traders interested in the EUR/USD trading or investing should follow an economic calendar for important economic events in either of the countries.
Risk warning: Trading in FX and CFDs entails high risk of losing capital.
