Why is EURUSD Always a Popular Asset for Trading | FXlinked

Why is EURUSD Always a Popular Asset for Trading

Without any doubt, the EURUSD is one of the most popular trading assets part of the Forex market. It is the primary choice among retail Forex traders, and for a good reason.

Since its inception, the Euro, now the currency of nineteen different European countries, faced various crises. Starting with the 2008 financial meltdown and moving to the Greek saga, the common currency was challenged to its core.

Yet, it survived, and traders love the EURUSD pair as one of the symbols of the current interbank market.

The Most Liquid Currency Pair

One of the main characteristics of the EURUSD pair is its very high liquidity. Literally, one can sell or buy huge volumes, and the pair won’t even blink.

It is only reasonable. The two currencies belong to the largest economies in the world.

On the one hand, the United States as the world’s economic powerhouse and, on the other hand, the Eurozone economies combined come in a close second place. Therefore, the flows between the two regions of the world are incredible, swallowing vast amounts each trading day.

Liquidity is an issue for many other currency pairs, like crosses. Forex trading when liquidity is scarce (e.g., at midnight, when positions rollover) is subject to high spreads and unusual trading conditions.

The Lowest Spreads in the Market

Another reason why traders love the EURUSD pair is the costs associated with trading it. More precisely, the low costs.

Virtually on any Forex broker offering the EURUSD has the lowest possible spreads among all other currency pairs. The spread, for those that aren’t familiar with the terminology, is the difference between the bid and the ask price of a currency pair.

In Forex, currency pairs have two prices, also called quotes: the bid and the ask. Selling always takes place from the bid price and buying from the ask price.

The difference between the two is called the spread, and it represents a fee the broker charges for giving access to the interbank market.

Nowadays, the spreads on the EURUSD pair can reach even the zero level on some brokers, but only during certain periods in a day. But spreads below half a pip are the norm for the EURUSD pair, making it one of the most loved trading assets.

Relative High Volatility

The EURUSD pair is sensitive to news both out of the United States and Eurozone. Recent years had a particular effect on the pair’s volatility, with the financial crisis in the United States, the Greek debt issue in Eurozone, and so on.

For this reason, the high volatility on the pair brought plenty of opportunities for retail Forex traders. High volatility typically is associated with high prospects for speculation, but also with higher risks.

To sum up, the two currencies are the most important one of the Forex dashboard. Any Forex education guide mentions that the U.S. Dollar is the world’s reserve currency. Since the United States dropped the gold peg in 1971, the USD started to fluctuate against other currencies, forming what we know today as the interbank market.

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