EUR/USD Factors

What Affects The EURUSD Rate?

The Incredible Importance of Interest Rates

 When trading the EUR/USD currency pair in the Forex market, there are two major financial institutions you should become intimately acquainted with: the United States Federal Reserve Back (or Fed) and the European Central Bank (or ECB). These two institutions set the rate of interest on both the US dollar and the Euro. They release their information on different schedules, which is just one reason to watch them closely. The European Central Bank releases their interest’s rate for the Euro each month, generally in the first or second week. The Fed releases the interest rate for the US dollar only eight times per year at any time in a given month. They’re not quite as punctual as their European counterparts. Using these numbers is vital to your trades in the Forex market.

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The next most important factor to consider when trading the EUR/USD currency pair in the Forex market are the employment numbers for each economy. For the United States, the number you have to look for is the Non-Farm Employment Change. This is one number the United States releases very punctually: the Bureau of Labor Statistics posts the figures on the first Friday of every month. Again, it is perhaps the single most important number to your Forex market investments. The next figures you need to focus on are the employment numbers in Europe, particularly those with the largest economies. Focus on Germany and France at first; you can fold into the entire European Union as you become a more experienced Forex market trader.

Even More Important Rates

As if this was not getting complicated enough, there are more numbers and figures you need to keep watch on to succeed in the Forex market when trading the EUR/USD currency pair. These figures include the Gross Domestic Product (GDP), the total of goods and services a country provides in one year. The second figure is the Trade Balance. In simple terms, the Trade Balance is calculated by taking the difference of value of all imports and exports. A surplus Trade Balance means that economy exports more than they import. This is a positive thing for an economy, and a good sign to the Forex market trader. If, however, the imports outweigh the imports, that is a negative sign for an economy. If your currencies are tied up in those economies, it might be worth considering selling.

More Numbers: Using the EUR/USD currency pair on the Forex market seemed like a walk in the park just a minute ago, didn’t it. But there is more to come. Successful Forex market traders – and we really cannot stress that term enough, because unsuccessful traders can be gone in a matter of days, not even weeks – must also review retail sales, producer price indexes, and consumer prices: all inflation-influenced and a red flag when it comes from an economy because that means it’s in trouble.

There are also a number of other indicators to help a Forex market investor stay ahead of the game and competition: the sentiment indicators – such as the University of Michigan Consumer Sentiment Indicator or Germany’s ZEW Economic Sentiment Indicator. These all point and give direction of where an economy is headed: to high ground or low ground. In the Forex market, these indicators add up fast and can mean the difference between massive profits and massive losses.

So start burying your head in the newspaper’s finance section. Chances are no one else in your family will want it. Also, spend as much time online as possible, since you’ll get the most up to date information available there. And again, don’t just pay attention to the financial sections. International politics, world news, and even local news from the US or one of the European Union countries can have an impact on the EUR/USD currency pair’s trading rate of the Forex market.

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