Of the $5.3 trillion transacted daily in the forex market, 87% of the total transactions take place in USDs while 33.4% is done with Euros. These two currencies together constitute the two most widely traded pair and account for 24.1% of all transactions. A currency pair as popular as this holds huge opportunities to make a profit and hence, proper forex EURUSD analysis is necessary to enhance returns. Technical tools are available to analyze movements, and orders should be placed accordingly.
The analysis in means studying the currency market based on various tools and statistics and developing an intuition about the rising market. Generally, there are two types of analysis:
This technique of forex market analysis EURUSD involves the use of graphs and plots. It is based on two basic assumptions – history is bound to repeat itself, and the market always follows a certain trend. Accordingly, prediction and analysis for EUR/USD pair is developed and allows the trader to put in order.
Autoregressive Moving Average or ARMA time series model is used to analysis Euro’s market movements. Market quote data of this currency is collected over time, and an average of the same is performed. This gives an idea about future possible value. Also, if the market has followed a particular pattern in the recent past, it is fitted against a similar graph and can be expected to follow similar lines.
This is less mathematical and more of market survey. This type of forex market analysis EURUSD takes into consideration Euro-Zone’s economic condition to predict market movement. GDP, employment rate, export and import growth, inflation rate, and many other similar aspects of countries are considered before a quote is set on Euro.
Both these above-mentioned analyses are necessary for a trader before he/she considers investing in this currency pair. The necessity can be explained with the following example.
Why carry out forex EURUSD analysis?
Suppose the current market rate for EUR/USD stands at 1.36. With technical analysis, you can predict that the market is expected to be bullish and place a purchase order. You can study candlestick charts or opt for other analysis tools to observe past market trends and forecast Euro’s future.
However, fundamental analysis may show you that Germany’s exports are recently falling, and Brexit will mean that England will no longer contribute to EU’s annual budget. This is an indication of a bearish Euro market.
Hence, a perfect blend of both is necessary before investing in EUR/USD or any other pair. Technical analysis is showing growth, so you place buy order and make use of the bearish market. Again, based on fundamental analysis, you may refrain from investing in this pair and go for another bullish pair.
A number of analysis tools are available online that make near accurate predictions and notify you of events that are likely to affect the market. Also, forums and expert blogs provide valuable insight into trading. With proper forex EURUSD analysis and investing technique, profits can reach almost up to 40% within a small time-span. Start analyzing and start investing!