EUR Trading Pairs in forex trading is one of the most traded pairs. EUR involved in traded pairs such as EUR/GBP, EUR/CHF, EUR/ USD, EUR/JPY, EUR/AUD, and EUR/ CAD. Liquidity is primarily determined by traders who are interested in news events.
Because of that, the fact that the most liquidity is belonged to it is the reason why this currency pair has the greatest interest. There is a belief of some traders to some EUR-based pairs because of their great liquidity.
Correlations in EUR Trading Pairs (EUR/GBP)
A large part of the trade that the Britain engages in is with Europe and vice versa which causes this prominent correlation in the first place between the two that belong to the Eurozone.
Even though two different currencies are used by them, it can be predicted that if Europe is struggling at some point, Britain will most likely catch up. In recent years, various events that happened across Europe have been influencing this correlation.
The entire world was affected by the financial crisis in 2007/2008 but the UK was able to quickly take action to safeguard its currency and economy and affect the EUR Trading Pairs. The official currency of the UK fell and the GBP hit the British economy.
But, they considered offering their quantitative easing and monetary policy which ultimately helps to stabilize the country’s economy. On the other hand, Europe needed more time to accept what had happened. After the crisis, in the first two years, the laws were created by Europe.
They were prevented from enforcing the bailout plan by that laws. Between 2013 and 1015, soon after, the major debt problem was faced by Europe in Italy, Greece, Portugal, and Spain. In June 2016, there was an announcement of Brexit.
When the GBP against EUR fall 6.02%, it was the worst day for the GBP. Before the COVID-19, GBP was slowly bouncing back but the expectation of the deal for a new trade between the UK and EUR still have EUR/GBP mimicking the relationship between the two.
EUR Trading Pairs (EUR/CHF)
The CHF has been tied to the EUR by the Swiss policy that made these two currencies have a close correlation said to be close to 100%. During the EUR crisis, the Swiss received a large amount of money.
One of the strongest banks in Europe is the Swiss bank that has a very stable neutral government that attracts many to decide to send their euro. Due to this great selling, EUR-buy, the large movements of the currency pairs is the reflection of the CHF movements.
CHF will change if the EUR move up and vice versa. That is why traders cannot earn the most with the best forex broker from this pair. There will be often the same amount from this simultaneous movement and there is a limitation for the opportunities for making money with this currency pair.
A Final Word
Inflation becomes the most important aspect for the European Central Bank and, as such, is a very important indicator that traders should pay attention to when looking at the European reports. Every country in Europe has its own PPI and CPI.
Unlike USD or GBP, a trade deficit is generally not run by EUR, as traditionally, this has not been a concern in relation to this currency in trading with foreign countries around the world.
Finally, compared to other GBP or EUR based crosses, the EUR/GBP is less volatile due to mutual dependence and economic proximity, but changes in the monetary policy of the respective currency’s central bank make these pairs particularly sensitive.
When entering the forex market, there are various currency pairs you can trade. With didimax forex broker you can trade in easily with great advantages to help you become a successful trader of EUR Trading Pairs and other pairs.
