Forex Euro Dollar Forecast

When talking to people who have never tried forex trading before, even if they come from the world of stocks, bonds, or futures, it always reminds me that sometimes even the most basic foundational elements of this global powerhouse of a market have to be explained. So let’s jump right into what the pairings mean, what the main pairings are, and what the cross pairings are.

What is a currency pair? Let’s start with the Eur/Usd which has the US Dollar as the base currency in the pair against the Euro. So what does that mean when I see a price quote of 1.3200 on the Eur/Usd? The easiest way to remember the answer is this: take the base currency pair, in this case the US Dollar, look at the price quote of 1.3200, and then say, “it will take 1.3200 US Dollars for me to buy 1 Euro.” That is exactly what that price quote means. If you check the price quote a couple of months later and it is suddenly 1.4000 then that means the US Dollar as gotten weaker against the Euro because it now takes 1.4000 US Dollars to buy 1 Euro. Conversely, if the price quote is 1.2500 a couple of months later, then the US Dollar has become stronger because now it will only take 1.2400 US Dollars to buy 1 Euro. Forex Euro Dollar Forecast

Forex trading can be especially challenging when you see a price quote of say 100.50 on the Usd/Jpy pair for example. Well, using our method from above, simply take the base currency of Jpy and look at the price quote of 100.50 and that is how many Jpy it will take to buy 1 US Dollar. Pretty easy huh? Now you will have no difficulty understanding the price quote on any pair the next time you look at a chart screen or a quote window.

Now that we know how to read the price quotes, what are the main pairs and cross pairs? Well the main pairs are usually the strongest economies throughout the world versus the US Dollar. A few of these pairs are Eur/Usd, Gbp/Usd, Aud/Usd, Usd/Cad, Usd/Jpy, and Nzd/Usd. A cross pair is a pair not involving the US Dollar such as Eur/Jpy, Gbp/Jpy or Eur/Gbp to name a few of the more popular ones.

Hopefully this brief article will be helpful to you if you have been intimidated by the forex trading landscape in the past. It takes a little getting used to with all of the different currency pairs, time zones, and economies. But once you start to wrap your mind around how all of the pieces fit together it’s really not that bad – and many of us think it’s actually quite fun! Forex Euro Dollar Forecast