EUR-USD



EUR-USD

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EUR-USD

 

This is the most popular currency pair in the world, representing the world’s two largest economies. The Euro was created to facilitate cross-border trade of European trading partners. Since its inception in 1999, the pair has faced considerable volatility as the world has faced multiple events of volatility such as the tech boom becoming the tech bust, the real estate bubble, and the European Debt Crisis which still has yet to find long-term resolution.

BREAKING DOWN ‘Currency Pair: EUR-USD (Euro/U.S. Dollar) ‘

The EUR/USD is affected by factors that influence the value of the euro and/or the U.S. dollar in relation to each other and to other currencies. For this reason, the interest rate differential between the European Central Bank (ECB) and the Federal Reserve (Fed) affects the value of these currencies when compared to each other. When the Fed intervenes in open market activities to make the U.S. dollar stronger, for example, the value of the EUR/USD cross could decline due to a strengthening of the U.S. dollar compared to the euro.

Brief History of the Euro Currency

The euro currency originated on 1992 as a result of the Maastricht Treaty. It was originally introduced as an accounting currency in 1999. On Jan. 1, 2002, the euro currency began circulating, and over the course of several years, it eventually became the accepted currency of the European Union and ultimately replaced the currencies of many of its members. Consequently, the euro integrates and represents a large number of European economies. This serves to stabilize currency exchange rates and volatility for all members of the European Union. It also makes the euro one of the most heavily traded currencies in the forex market, second only to the U.S. dollar.

 

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