Currency Pair: EUR/USD (Euro/U.S. Dollar)

AAA

DEFINITION of 'Currency Pair: EUR/USD (Euro/U.S. Dollar) '

The abbreviation for the euro and U.S. dollar (EUR/USD) pair or cross for the currencies of the European Union (EU) and the United States (USD). The currency pair tells the reader how many U.S. dollars (the quote currency) are needed to purchase one euro (the base currency).

Trading the EUR/USD currency pair is also known as trading the "euro".

INVESTOPEDIA EXPLAINS 'Currency Pair: EUR/USD (Euro/U.S. Dollar) '

The value of the EUR/USD pair is quoted as 1 euro per x U.S. dollars. For example, if the pair is trading at 1.50 it means that it takes 1.5 U.S. dollars to buy 1 euro.

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) will affect 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.

The EUR/USD tends to have a negative correlation with the USD/CHF and a positive correlation to the GBP/USD currency pairs. This is due to the positive correlation of the euro, the Swiss franc and the British pound.

VIDEO

Loading the player...
RELATED TERMS
  1. Forex Spot Rate

    The current exchange rate at which a currency pair can be bought ...
  2. Pip

    The smallest price change that a given exchange rate can make. ...
  3. Euro

    The official currency of the European Union's (EU) member states. ...
  4. Quote Currency

    The second currency quoted in a currency pair in forex. In a ...
  5. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  6. USD

    In currencies, this is the abbreviation for the U.S. dollar. ...
RELATED FAQS
  1. How do I implement a forex strategy when spotting a Mat Hold pattern?

    Mat hold patterns are continuation formations that occur in Japanese candlestick chart analysis. Mat holds are rare, requiring ... Read Full Answer >>
  2. If a country's currency is determined by the strength of its economy, why isn't the ...

    Generally speaking, when Country A's currency is worth more than that of Country B, it does not necessarily mean that Country ... Read Full Answer >>
  3. Where did the term 'pip' in currency exchange come from?

    The term pip is an acronym for percentage in point or price interest point. It measures a unit of change within a pair of ... Read Full Answer >>
  4. How do value-added taxes work in the European Union?

    A value-added tax (VAT) in the European Union functions in much the same way as a VAT in any other legal jurisdiction. VAT ... Read Full Answer >>
  5. What is the difference between pips, points, and ticks?

    Point, tick and pip are terms used to describe price changes in the stock market and other markets. While traders and analysts ... Read Full Answer >>
  6. What are the most common market indicators to follow the European stock market and ...

    Market indicators can be used by technical analysts to measure the movements of major exchanges or indexes. Almost all market ... Read Full Answer >>
Related Articles
  1. Options & Futures

    A Primer On The Forex Market

    Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
  2. Forex Education

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.
  3. Forex Education

    Forex: Wading Into The Currency Market

    We go over the ground rules and available resources needed for this undertaking.
  4. Forex Education

    Understanding Forex Rollover Credits And Debits

    Forex trades are subject to receiving interest or being debited interest if positions are held overnight.
  5. Forex Education

    How To Become A Successful Part-Time Forex Trader

    Getting started in this potentially profitable market is easier than you might think.
  6. Forex Education

    Dollarization Explained

    Find out how fledgling economies can find some stability in their currency and attract foreign investment.
  7. Bonds & Fixed Income

    6 Factors That Influence Exchange Rates

    Find out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  8. Personal Finance

    What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.
  9. Economics

    Is Germany Carrying The European Economy?

    Germany has been widely viewed as the economic catalyst and stabilizer for the European Union and for good reason.
  10. Forex

    Will The US Dollar Surpass The Euro?

    The euro is weakening as the European Union turns to quantitative easing to help its economic woes. Meanwhile, the U.S. dollar is strengthening.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center