How to Trade EUR/USD like a Pro
Things to know:
The Euro-dollar is the largest and most traded currency pair in the entire world. This is due to massive economies in the United States, and European union. The need for high volumes of currency exchange between these two areas makes the EUR/USD a very popular currency pair to trade.
The high trading volume in this pair makes it an attractive market to trade - for both experienced and new traders. One major advantage of trading the EUR/USD is that this high trading volume usually leads to tighter spreads (and hence lower trading costs + easier execution!)
When trading the EUR/USD, fundamental analysis plays a large role.
A major component to the Euro rising or falling has to do with the central bank policies of each respective economy. If the dollar for example is hawkish, and has a strong outlook for the US economy, it is possible to see the Euro fall, causing the currency pair to fall.
If the Euro is strong, and/or the dollar is weak, we would expect to see weakening unemployment in the US, and/or strong figures coming from the Euro region in things like inflation (CPI), retail sales, unemployment, etc.
When trading the EUR/USD, technical analysis can be a useful tool to help with entries and exits. The EUR/USD shifts from being a back and forth, choppy market, to a strongly trending market.
In times of back and forth, lazy price action, the EURUSD can be a great range bound market to trade. Simple Bollinger band, and support and resistance concepts can work great when employed properly during this time.
When the EUR/USD is in a trending state, watch for breakouts on the higher timeframes, and pullbacks to key levels of support or resistance.
Range bound example:
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