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September 29, 2020

XM, Trade EURUSD with the Tightest Spread and Lowest Trading Cost

XM offers EURUSD from 0.0 pips raw spread with small trading commission.

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Trade EURUSD with the lowest cost

EUR/USD is the most popular trading currency pair in Forex.

Due to its large liquidity pool, tight spread, and the characteristic of simplicity to follow fundamental issues from anywhere in the world, many traders choose to trade EUR/USD with any brokers.

You may do scalping trades, day trade, swing trade or run EAs (Expert Advisers) on EUR/USD though, do you know the best Forex broker to trade EUR/USD with?

We recommended, XM the most popular MT4 Forex broker in the world.

XM provides EUR/USD with as tight as 0.0 pips raw spread.

The trading commission is also small on XM Zero and Ultra-Low Spread account types.

With XM, you can avoid a large amount of cost by trading EUR/USD, while participating in bonus promotions to benefit even more.

Go to XM Official Website to find out more about XM’s trading condition today.

How to open XM’s FX trading accounts and get $30 Bonus?

EUR/USD has the world’s largest trading volume

Did you know that EUR/USD pair has the world’s largest trading volume.

It may be difficult for some beginners to imagine the economic situation of each euro country and what kind of material is attracting attention, and the image of a currency pair that does not know how to trade.

However, EUR/USD is a currency pair that is easy to read due to the large volume of transactions and is easy for beginners to trade.

What kind of currency pair is EUR/USD, which is said to be easy to trade even for beginners?

First, we would like to introduce the current situation regarding the Euro and the US dollar and the materials.

Characteristic and Trend of each currency in the Forex market

The situation Euro currency

Important sources of the euro for 2020 are the German coalition government, the result of the Italian House of Commons election, rising inflation and exit policies, trade talks over Brexit, and Eastern European countries.

They are an important political situation related to Euro’s value.

1. German Political Movements

Regarding the German coalition government, the whereabouts of the coalition talks between the Christian Democratic Union of Germany and the Social Democratic Party led by Chancellor Angela Merkel was drawing attention.

In the general election held in September, the Christian Democratic Union maintained its first party, partly because German people were dissatisfied with Chancellor Angela Merkel, who is tolerant of accepting refugees.

The rate has been greatly reduced, dropping from the previous 41.5% to 32.9%.

A breakthrough at this time was an option for Germany, a right-wing party critical of refugee acceptance.

As a result, Chancellor Angela Merkel’s centripetal force has declined, raising concerns about future administration.

After the election, the political situation was confused when the Social Democratic Party of Germany, which had formed a coalition until then, refused to form a coalition with the Christian Democratic Union.

Chancellor Angela Merkel has begun coalition talks with the Greens and the Liberal Democratic Party, but it also broke down.

However, when the German Democratic Party announced the start of coalition talks with the Christian Democratic Union in December, the coalition talks finally began to proceed, and in February the grand coalition negotiations reached a principle agreement.

In other words, there was a political gap for as long as four months.

However, although the principle was agreed, the content was a major concession by the Christian Democratic Union.

The market liked the result, but it is worrisome that Merkel’s decline in centripetal force has surfaced.

The refugee issue has a lot to do with the difficulty and rupture of the coalition with the Social Democratic Party of Germany, the Greens, and the Liberal Democratic Party.

In addition, the Christian Democratic Union has adopted austerity until now, but it is expected that Germany’s fiscal policy will change as a result of this major concession to the German Democratic Party.

But first of all, the convergence of a series of issues surrounding the coalition government seems to be positive for the euro.

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2. The economy and Politics of Italy

Next, as a result of the Italian House of Commons election held in March, the centre-right coalition jumped to the top, and the five-star movement, a nationalist party, gained the second largest number of seats.

However, since none of the parties reached a single majority, attention is focused on what kind of coalition it will be.

Coalition talks are expected to proceed centered on the Five Star Movement and the alliance.

The center-right coalition, which has made great strides this time, is becoming more influential, with anti-EU and anti-immigrant alliances accounting for 17%, and the five-stars alone won 33% of the seats.

With the center-right coalition and the five-star breakthrough, there is growing concern that the huge amount of bad debts of Italian banks may be postponed.

It has been pointed out that the main cause of the huge amount of non-performing loans of Italian banks is its management structure, but at present, the management structure has not improved and the non-performing loan ratio has improved due to the economic recovery.

If the problem of bad debts does not improve as it is, what is worrisome is what will happen during the economic slowdown.

If bad debts increase again in a recession again, problems like the Greek crisis may eventually occur.

Italy’s exports were damaged and the economy remained sluggish for a long time as Italy introduced the euro at a higher rate than it actually was when it was introduced.

In addition, one of the reasons for the economic downturn was the high-cost structure of small and medium-sized enterprises.

It is necessary to add value or reduce costs so that it can withstand high costs, but it was not easy to add value to Italian products, and we had to start with cost reduction.

Of the high-cost Italian companies, the most expensive was labor costs.

In particular, labor costs in Italy’s small and medium-sized manufacturing industry are high, and in order to reduce this, labor market reforms such as deregulation of dismissal were promoted under former Prime Minister Renzi.

However, there are concerns that this election will delay labor reforms.

In this way, the future trend of Italy is uncertain, and if the policies that are attracting attention such as bad debts of banks and labor reforms are delayed as worried, it may cause euro instability.

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3. The trend of Euro Area

Next is the trend of the Euro.

One of the things that is attracting attention as a trend of the euro is the reduction of monetary easing.

Quantitative easing has continued until September 2018, but since 2018 they have reduced the monthly purchase of assets such as government bonds to 30 billion euros.

Given the rising GDP of Europe and the rising consumer confidence index, it seems reasonable for quantitative easing to shift to an exit strategy.

On the other hand, there are concerns that the rapidly recovering inflation rate is stalling in Germany and Italy.

Under these circumstances, what is drawing attention is the remarks made by President Dragi after the ECB board meeting.

The euro’s key policy rate, the progress of exit strategies from quantitative easing, and positive surprises to market expectations (such as raising the key policy rate against expectations) will be noticed if there is issues.

For example, if there is a high expectation in the market that “Isn’t the main policy interest rate raised?”

In contrast to the “deferred this time” forecast, even if the forecast remains unchanged, the expectation was high.

It will be a factor in selling the euro.

In addition, at the press conference of President Dragi on March 8, 2018, the euro was in conflict because he expressed concern about protectionism in the United States and said that inflation in the EU region was suppressed.

What we can see from this is that President Dragi’s remarks will influence the movement of the euro, regardless of the outcome.

In this way, the political background of a country that uses the euro as its currency is important in order to grasp the trends of the euro.

Britain’s departure from the EU will also have a major impact on the EU.

The UK wants to leave the EU but enjoy the benefits of a single market.

However, if this is allowed, the second and third country may emerge, jeopardizing the EU’s survival.

Therefore, the EU cannot afford to make too many concessions to Britain.

It should be noted that the UK’s trade talks over Brexit have the most impact on the pound, but also on the euro.

In Eastern Europe, as in Western Europe, anti-immigrant and anti-EU momentum is increasing.

Hungary, Poland and the Czech Republic are becoming more anti-EU.

It is necessary to pay attention to the political trends of these countries as well as other Eastern European countries.

As you can see, there are various materials on the euro.

By the way, the euro is active during European time.

Also, because European time partially overlaps with New York time, it works well in the morning of New York time.

The most traded currency pair in European time is still EUR/USD.

In addition, the Bank for International Settlements announced in 2016 that the volume of transactions by currency pair was the highest in EUR/USD, at US $1.173 trillion.

List and Definition of Macroeconomic indicators of each country

4. US Interest Rate and Policies

In the United States, hourly wages are gradually accelerating due to increased upward pressure caused by tight labor supply and demand.

In addition, personal consumption is firm, and the economy is gradually improving, with improvements in employment and income and a recovery in capital investment.

In the United States, the point of attention was whether or not the tax reform bill would be passed, but at the end of last year, major tax cuts such as a drastic reduction in the corporate tax rate and a reduction in the maximum personal income tax rate led to the next infrastructure to the United States.

Investment trends are attracting attention.

The infrastructure investment plan has expanded from the promise of $ 1 trillion to $ 1.5 trillion, but no specific details have been given yet.

Regarding the US dollar, the pace of rate hikes is drawing attention.

The US policy rate hike is a factor in buying dollars, but the pace of the rate hike is drawing attention as the policy rate hike itself has already been factored in.

The FRB chairman Powell said in his first parliamentary testimony after taking office, he said, “Although the easing has been reduced, we do not see it as having a significant impact on the outlook for the economy, employment and prices.”

It is believed that the pace of rate hikes will accelerate as he is confident about future economic expansion and price increases.

Currently, the Fed expects three times of rate hikes, but there is a view in the market that it could increase to four times.

As a result, much attention has been paid to the FOMC (Federal Reserve Board) and Chairman’s press conference.

If the rate hike increases from three times, it is currently a positive surprise and leads to a dollar buy.

However, if there is a high probability that the pace of rate hikes will accelerate, such as when Chairman Powell and the Fed Governor have made statements suggesting that the number may increase to four, dollar buying will be temporary even if the rate is raised four times.

You need to be careful because it tends to be a strange trend.

In addition, there is a negative view that the faster pace of rate hikes may adversely affect exporters, so even though the rate hike has been raised, it does not lead to dollar buying, but rather yen buying accelerates.

One of the major influences on the US dollar today is that President Trump is strengthening protectionism.

President Trump has decided to impose a 25% tariff on steel and a 10% tariff on aluminum from March 23.

Furthermore, as an infringement of China’s intellectual property rights, the US imposed a 25% tariff on 1,300 items such as industrial equipment in Australia.

In response, China has announced that it will impose a 25% tariff on 106 items such as soybeans, beef, automobiles, and airplanes produced in the United States as a retaliatory tariff, triggered by President Trump’s protectionist trade policy.

There is concern that a trade war will break out.

We will be paying close attention to future trends, but it should be noted that news that is expected to intensify trade friction is likely to lead to dollar selling.

Therefore, for now, let’s also pay attention to the US-China trade policy and the US trade policy toward other countries.

Which is the Best Currency Pair to trade?

Main Characteristics of EUR/USD

EUR/USD is a currency pair that is traded all over the world, not to mention Europe and the United States.

According to the Bank for International Settlements, the volume of EUR/USD transactions in 2016 was US $ 1.173 trillion, with a share of 23.5%, which is proudly number one over other currency pairs.

The EUR/USD is a dollar straight currency pair, so it tends to be trendy.

And once a trend comes out, it tends to become a strong trend, so it is basic to trade in a forward trend rather than a reverse trend.

In addition, EUR/USD tends to be less likely to move irregularly due to a large number of trading participants.

Due to the high volume of transactions, they tend to be more or less technically loyal.

However, immediately after the opening of the London market or the opening of the New York market, large orders may be placed and speculators may move actively, resulting in irregular movements.

Therefore, beginners should trade after the market has settled down to some extent.

EUR/USD has such a background, but what are the characteristics of EUR/USD compared to other currencies?

Next, we would like to introduce the features of EUR/USD.

Every Important US Economic Indicators and Data Releases

When is the best time to trade EUR/USD?

EUR/USD is a very high volume currency pair, but it is not actively traded all day long.

The euro is the most active currency pair in European time and London time, and the US dollar is the leading currency pair in New York time.

In European time, it moves well after when the London market starts to move.

However, in the case of Europe, due to the introduction of daylight saving time, the wintertime period will be delayed by one hour, and it will move well one hour after than usual.

After that, it moves even better when New York time begins, and it moves actively about 4 hours (that is, in the morning of New York time).

On the other hand, when it comes to Oceania’s time in Australia and New Zealand, and then Tokyo time, the movement slows down.

During Oceanian time, the Australian dollar and NZ dollar, and US dollar currency pairs are often traded, but the EUR/USD trading volume is limited.

The same applies to Tokyo time, and the trading volume of dollar straights other than USD/JPY is small, and cross-yen currency pairs are often traded.

Therefore, if you are trading EUR/USD, it will be easier to trade as the rates move well from European time to the morning of New York time.

International Forex market sessions – Trading Volume and Characteristics

Economic indicators to watch out for EUR/USD

Economic indicators of the United States and Europe are essential for trading the EUR/USD.

Be sure to check the important ones in each economic indicator.

For the euro, for example, the ECB’s monthly policy rate is announced.

In addition to quarterly GDP, producer price index, retail sales, industrial production, etc., important events such as the ECB Board of Directors and subsequent statements by the ECB Chair will also have a significant impact.

On the other hand, regarding the dollar, the employment statistics are still the most noticeable, and the results have a great influence on the market price.

Currency pairs that involve the dollar will fluctuate depending on the result.

In the week when the employment statistics are released, the market price tends to be large and difficult to trade through.

This tendency is especially noticeable from around the middle of the week.

In addition to the US and employment statistics, FOMC (Federal Open Market Committee) has a great influence on the exchange rate.

It is a very high-profile meeting in the market as it determines the Fed’s monetary policy.

Held eight times a year, monetary policies such as business conditions as well as policy interest rates are announced.

And the FOMC in March, June, September, and December will also have a press conference, which will be especially noticeable.

In addition, the FOMC minutes will be announced at a later date, and the content will also attract attention.

In addition, the ISM Manufacturing Business Index, ISM Non-Manufacturing Business Index, ADP Employment Statistics, Retail Sales, Consumer Price Index, GDP, etc. are attracting attention.

Access to XM’s Economic Calendar for Fundamental Analysis

How to smartly trade EUR/USD?

Based on the outline and characteristics of EUR/USD, we will introduce the trading method of EUR/USD from here.

Should you focus on fundamentals or technical?

EUR/USD is a currency pair that tends to be trendy, and because of the large volume of transactions, there are relatively few irregular movements, and technical skills tend to be effective.

Therefore, it is believed that many people are trading using technical analysis.

Trading based on technical analysis is effective in EUR/USD as mentioned above, but if you want to trade in the long term, it is a good idea to incorporate fundamentals in addition to reading the big flow.

For short-term traders, trades based on technical analysis are effective.

Central bank monetary policy and national economic policies have a long-term impact on foreign exchange rates.

Therefore, in the case of long-term trading, it is important to read the big flow and trade.

Then, if a flow in the opposite direction temporarily occurs in a large flow, you should take measures to prevent a large loss.

However, in the case of short-term trading, it is of course important to be aware of the big flow, but we aim for profit by catching the flow that can be said to be the temporary noise in the opposite direction that occurs in it.

Therefore, for short-term trading, it is more efficient to analyze the exchange rate with a focus on technical analysis.

In this way, what you trade based on depends on your trading style.

Before trading EUR/USD, think carefully about whether you want to trade short-term or long-term, and plan your investment strategy.

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Example of trading EUR/USD

Here, we will introduce a trading method using MACD and moving averages.

EUR/USD is a currency pair that tends to create trends, so we aim to earn profits when a clear trend occurs.

In addition, this method identifies entry points and profit-taking points in one hour chart.

For candlesticks chart, use 1-hour and 4-hour frames.

In addition, MACD should be set Fast to 48, Slow to 104, Signal to 9, and displays it in 1 hour chart.

The moving average line uses 10 days and is displayed on the 4-hour bar.

If the MACD line of the 1-hour MACD crosses the signal from the bottom to the top and the 10-day moving average of the 4-hour candlestick is upward, you can buy and enter.

On the contrary, when the MACD line of the 1-hour MACD passes through the signal from top to bottom, check the 10-day moving average of the 4-hour candlestick, and if it is downward, enter with sell.

At the time of buy entry, the profit is confirmed when the 1-hour MACD line passes through the signal from top to bottom, and at the time of sell entry, the 1-hour MACD line goes from bottom to top of the signal, profit will be confirmed.

Economic Indicators and Fundamental Analysis

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