Live Forex Chart: Euro vs. Dollar
You’ve heard it before, and you’ll hear it again: don’t trade foreign exchange unless you fully understand the risks involved. If you don’t, and if you’re looking at the live forex chart to make decisions about your trading, then chances are pretty high that you’ll lose money in this highly volatile market. To help get you started the right way, we talked to expert trader Elijah Williams about how to trade the euro vs. dollar so that you can make informed trading decisions with confidence and live by your rules no matter what happens on the world stage.
Table of contents:
Section 1. Introduction
Section 2. The EUR/USD Pair
Section 3. The EUR/USD Live Chart
Section 4. EUR/USD Technical Analysis
Section 5. EUR/USD Fundamental Analysis
Section 6. EUR/USD Trade Setups
Section 7. Conclusion
Introduction
The euro is a common form of currency in Europe and many other countries, while the dollar is typically used in the United States. The two currencies are often traded together because they have such different values; for example, one euro might be worth $1.38 or less, while one dollar can be worth as much as €0.87 or more depending on the date and time of day. A trader may buy euros with dollars, sell euros to get dollars, or do a combination of both. Buying euros (or selling them) and then exchanging them back into dollars is called dollar-carry trade.
The EUR/USD Pair
This pair is one of the most popular pairs among traders and investors because it reflects the value of the euro relative to the dollar. The EUR/USD is considered a cross-rate as it only reflects two currencies (euro and dollar) instead of multiple currencies like many other currency pairs. This pair is used by traders to forecast how the values of these two currencies will change over time, which can be useful for long-term investing or short-term trading plans. For example, if you predict that the value of the dollar will increase against the euro in six months time, then you would buy euros now. If you believe that this same relationship holds true but over a shorter period of three months, then you would buy euros today and sell them in three months when their value has increased.
The EUR/USD Live Chart
At any given time, the prices of different currencies are changing, and this is reflected in the live forex chart. The EUR/USD live chart reflects the current price for one euro in US dollars, which changes continuously as people trade these currencies with each other. As you can see from the chart, it has been on a steady decline since mid-2016, when it was trading at just over $1.10. It peaked at 1.1180 in late January but has been decreasing steadily ever since to 1.0950 today, a decline of nearly 10%. You can also see where there have been occasional spikes (a sudden increase) during periods of increased economic turmoil or international political tensions. For example, we saw a spike in November 2016 after the UK's Brexit vote and another one early last month when the US put North Korea on its list of state sponsors of terrorism.
EUR/USD Technical Analysis
The EUR/USD is currently trading at 1.1407 and is in an uptrend. This means that the price of EUR has been going up and the price of USD has been going down at a steady pace for the past few days, which will continue to happen as long as this trend continues. The chart below shows how this trend looks graphically with two lines on the chart denoting how far EUR and USD have gone up or down. With each bar on the chart there is a series of red and green arrows pointing in the direction of either increases or decreases for both currencies. If you want to know what direction the price change was go ahead and look at where those arrows are pointing (). The red arrow points upward if it was an increase and downward if it was a decrease while green points downward if it was an increase and upward if it was a decrease.
EUR/USD Fundamental Analysis
The EUR/USD currency pair is one of the most popular trading pairs in the world, and for good reason. The euro and dollar are two major currencies that have a large impact on global markets and economies, so changes in their relative values can be extremely important to market participants. This forex chart shows that the euro has been weakening against the dollar since December 2011, as it began to gradually decline from 1.2900 to 1.0900 during this time period. It was only after the European Central Bank announced more stimulus measures in March 2015 did this trend reverse; the euro rose to 1.1905 by January 2016 before dipping back down again. In addition, there were three peaks at the end of 2016 which corresponded with US President Trump's inauguration day on January 20th, new Prime Minister Theresa May taking office on July 14th and then German Chancellor Angela Merkel stepping down on October 24th respectively.
EUR/USD Trade Setups
1) EUR/USD is trading in a rising trend that has been intact for the last four days.
2) The pair is now consolidating near its upper channel line, with a flag pattern forming on the daily chart.
3) A break above this level will confirm the up-trend and lead to higher prices.
4) A break below this level will signal weakness and lead to lower prices.
5) Entry points are marked by blue circles on the chart below.
6) Exit points are marked by red circles.
7) An entry strategy of buying at 0.7486 with a stop loss of 0.7465 would have yielded 8% in five days (see white arrow).
8) An exit strategy of selling at 0.7872 after taking profits would have yielded 5% over three days (see red arrow).
9) Another option could be to buy at 0.7745 with a stop loss of 0.7675, which would yield 10%.
10) One more strategy could be to sell short at 0.7900, which should provide an opportunity for easy profit due to momentum from the upward trend.
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