EUR/USD: Trading Opportunities and Strategy Analysis Guide

What Is the EUR/USD Exchange Rate and Why Is It Important?

When it comes to forex trading, the EUR/USD pair is impossible to ignore. This is the exchange rate between the Euro (the common currency of the European Union) and the US dollar, representing the two largest economies on the planet.

Why does the EUR/USD pair attract so much attention? Because it accounts for over 50% of the total trading volume in the Forex market — this figure demonstrates its enormous appeal to traders worldwide. This currency pair tells us how many US dollars are needed to buy one Euro.

Real-Life Examples of the EUR/USD Exchange Rate

To understand better, consider two scenarios:

Case 1: If the current rate is 1.30 USD/EUR and you have 250 Euros, you will receive 325 USD (250 × 1.30 = 325).

Case 2: With an exchange rate of 1.15 USD/EUR, if you hold 225 USD, you can exchange it for approximately 195.65 Euros (225 ÷ 1.15 = 195.65).

The Journey of EUR/USD Fluctuations Over the Years

EUR/USD is not a stable rate. Especially since 2020, it has experienced significant volatility — each month can record over 77 pips of movement. Just economic data releases from Europe or the US can cause this rate to shake sharply.

Historical events have shaped the trajectory of EUR/USD:

Factors Influencing EUR/USD Price

Indicators Affecting the Euro

The Euro is influenced by many variables from the European Union:

• ECB monetary policy — decisions on interest rates or quantitative easing
• Employment data — unemployment rates and new job reports
• Public financial health — budget deficits and public debt levels
• Economic growth — GDP of member countries
• Political volatility — new policy decisions or leadership changes

A typical example: During Greece’s sovereign debt crisis in 2009, investors sold off Euros, causing the EUR/USD rate to plummet.

Indicators Affecting the US Dollar

Similarly, the USD depends on the US economic situation:

• GDP and growth rate — of the world’s largest economy
• Federal Reserve interest rate decisions — US Federal Reserve
• Unemployment rate and employment reports
• Trade policies — agreements, tariffs
• Public finances — national debt, budget deficits
• Events at the White House — domestic and foreign policies

Especially, USD is considered a “safe haven” during global crises, making it more attractive to investors.

Analyzing EUR/USD: Recent Trends

2020-2021 Recovery After the Pandemic

After the ECB announced a large support package in March 2020, EUR/USD began a long-term upward journey, rising from 1.06 to 1.18 — a gain of 1,200 pips. Despite concerns about Europe’s economic recovery (especially in the tourism sector), ECB’s interest rate measures and economic support packages helped rebuild market confidence.

2022-2023 Volatility and Challenges

The year 2022 marked a turning point with shocking events:

Ukraine conflict: This negatively impacted EUR/USD as the EU relies heavily on energy imports from Russia (oil, natural gas, coal). Energy prices soared, increasing production costs and threatening European economic stability.

China’s Zero-COVID policy: Strict restrictions slowed China’s growth — its second-largest trading partner with the EU. As a result, the European economy was indirectly affected.

US inflation: Inflationary pressures forced the Fed to raise interest rates, boosting the US dollar’s appeal.

Combining these factors, EUR/USD may continue to weaken in the short term.

Specific Forecasts for May 2022

June: Starting rate at 1.064. Predicted high of 1.085, low of 1.053. Average 1.068. Expected end of month at 1.069 with a +0.5% change.

July: Starting at 1.069. Range from 1.021 to 1.069. Forecasted end at 1.037 with a -3.0% change.

August-September: Continuing downward, with expected month-end rates of 1.023 (-1.4%) and 1.022 (-0.1%).

October: Rate continues to decline, forecasted at 1.009 at month-end with a -1.3% change.

Effective EUR/USD Trading Strategies

Fundamental Analysis-Based Strategies

The first type focuses on predicting market trends through economic indicator releases. There are three main approaches:

1. Active Strategy: Traders position themselves about 20 minutes before major data releases. Based on their predictions, they choose to buy (Long) or sell (Short). This is an aggressive approach, capturing volatility right from the start.

2. Reaction Strategy: Instead of predicting beforehand, traders wait until data is released and then react. They compare actual results with expectations and decide on actions. This method is safer but may be delayed.

3. Combined Strategy: Experienced traders often combine both methods to optimize results and reduce risks.

Technical Analysis-Based Strategies

The second type uses technical analysis tools to make trading decisions. Common indicators include:

• Parabolic SAR — helps identify trend reversal points
• MACD (Moving Average Convergence Divergence) — signals buy/sell opportunities
• Price charts — identify support, resistance, and pattern formations

This approach requires experience and skill in distinguishing real signals from noise. Professional traders use these tools for a comprehensive market view.

Optimal Timing for Trading EUR/USD

Although the Forex market operates 24 hours a day, 5 days a week, EUR/USD does not always have the same volume and volatility.

Prime hours: From 20h-23h (Vietnam time), when both European and American markets are open. During this period, volatility can reach up to 25 pips, offering great opportunities.

Secondary hours: From 15h-18h (Vietnam time) when the European session just opens. Volatility is relatively stable at around 22 pips.

Weekly variation:

• Thursday: The most active day with up to 90 pips movement
• Wednesday and Friday: Also active (around 78 pips)
• Monday: The quietest day (around 60 pips)

These differences stem from the timing of key economic indicator releases, usually mid-week onwards.

Approaching EUR/USD Trading

To start trading EUR/USD, you need:

1. Choose a reputable Forex broker — this is the most important step to protect your assets

2. Study EUR/USD price charts — review history, support/resistance levels, and current trends

3. Determine your trading direction — decide to buy (Long) (expect price to rise) or sell (Short) (expect price to fall)

4. Set profit and risk targets — always place “take profit” and “stop loss” orders to automatically close positions when targets are reached

With these three simple steps, you are ready to participate in forex trading.

Other Major Currency Pairs in Forex

Besides EUR/USD, the market includes 6 other major currency pairs:

Pairs with USD as quote currency (quote currency):

• GBP/USD (Pound Sterling/US Dollar)
• NZD/USD (New Zealand Dollar/US Dollar)
• AUD/USD (Australian Dollar/US Dollar)

Pairs with USD as base currency (base currency):

• USD/JPY (US Dollar/Japanese Yen)
• USD/CHF (US Dollar/Swiss Franc)
• USD/CAD (US Dollar/Canadian Dollar)

These pairs are closely correlated with EUR/USD. Understanding this correlation helps you better manage risk or even double your profits.

Conclusion

EUR/USD is the symbol of global forex trading. To succeed, you need to understand the economic factors influencing it, master suitable trading strategies, and choose the right trading times.

Whether you are a beginner or an experienced trader, start with a demo account to practice your skills. Only when you are confident and experienced should you switch to real money trading. Patience and discipline are the keys to success in the world of EUR/USD trading.