European Euro (EUR)
Central Bank: European Central Bank (ECB)
Current Interest Rate: Link here

The Dollar's Nemesis
Frankfurt, Germany, is where you will find the central bank of the 16 member nations of the Eurozone, the European Central Bank. Similar to the United States' FOMC, the ECB has a primary body that is responsible for making monetary policy decisions: the Executive Council. The council is composed of five members and headed by a president. The remaining policy heads are chosen on the basis that four of the seats are earmarked for the four largest economies in the system, which include Germany, France, Italy and Spain. This policy is in place to ensure that the largest economies in the Eurozone are always represented in the case of a change in administration. The council meets approximately 10 times a year. (Read more about this and other central banks discussed here in Get To Know The Major Central Banks.)

Along with having control over monetary policy, the ECB also holds the right to issue banknotes as it sees fit. Similar to the Federal Reserve, policymakers can interject at times of bank or system failures, much like the global financial crisis of 2008-2009.The ECB differs from the Fed in one very important area: rather than focusing on maximizing employment and maintaining stability of long-term interest rates, the ECB works toward a prime principle of price stability, giving general economic policies second billing. As a result, policymakers will often focus a great deal on consumer inflation in making key interest rate decisions. (Read more about how central banks control inflation in What Are Central Banks?)

Although the monetary body may seem quite complex, the currency is not. When paired with the U.S. dollar, the euro (EUR) tends to be a slower currency compared to its colleagues (i.e., the British pound or Australian dollar). On an average trading day, the base currency can trade between 30-40 pips, with the more volatile swings coming in at 60 pips wide per day. Another very important trading consideration is time. Trading in the euro-based pairs can be seen during the London and U.S. sessions (which occur from 3am through 12pm EST). (Read more about choosing the optimal time to trade in How To Set A Forex Trading Schedule.)

Japanese Yen

Related Articles
  1. Trading

    Top 8 Most Tradable Currencies

    Currencies can provide diversification for a portfolio that's in a rut. Find out which ones you need to know.
  2. Trading

    Top 6 Most Tradable Currencies

    Here are six currencies that can diversify your portfolio.
  3. Insights

    5 Times the European Central Bank Got It Right This Century

    Find out how the ECB made the right moves in pulling the eurozone through many difficult periods despite skepticism the euro would stand the test of time.
  4. Insights

    Why These European Countries Don't Use the Euro

    The euro is a common currency of the European Union. Yet, many EU countries don’t use the euro. Investopedia explores why.
  5. Insights

    What Are Central Banks?

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

    5 Economic Reports That Affect The Euro

    There are hundreds of reports affecting the FX market. Find out which ones are the most relevant for traders.
  7. Investing

    European Banks: Growth in 2016?

    Understand the potential growth drivers of the European banking sector and whether 2016 will be a year of growth or continued stagnation.
  8. Investing

    The ECB Is Running Out Of Stuff To Buy

    More than 60% of German Bonds are now yielding below the deposit rate, meaning they are no longer eligible for the ECB's QE program
  9. Tech

    Can Bitcoin Kill Central Banks?

    Bitcoin is a peer-to-peer unofficial currency that operates without government or central bank oversight. Can Bitcoin kill off the need for central banks?
  10. Insights

    El-Erian Calls QE, Negative Rates "Ineffective"

    The accommodative move pleased markets initially, but things quickly turned sour, with the euro moving up and stocks down.
Frequently Asked Questions
  1. What's the Best Way to Contact Warren Buffett?

    Learn how to contact Warren Buffett and what kinds of contact is most likely to receive a response from him or from his company, ...
  2. What is the Financial Services Sector?

    A diverse group of companies, beyond banks and credit unions, comprises the financial services sector.
  3. Who are Whole Foods' (WFM) main competitors?

    Whole Foods' main competitors are Sprouts Farmers Markets and Trader Joe's. However, the recent acquisition by Amazon my ...
  4. What caused the Stock Market Crash of 1929 that preceded the Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ...
Trading Center