How to Read the USD EUR Forex Chart

The EURUSD Chart is one of the most popular for foreign currency exchange. These currencies are used the most in global commerce. The EUR USD Forex Chart is the ratio of the value between the two currencies.

A Brief History of United States Dollar

The Dollar goes back to 1750 Prussia (Germany) when it was called the “thaler” (meaning hill). It really gained prominence under the Spanish Empire when it was nicknamed “Pieces of Eight.” These formed the backbone of the present international monetary system.

History of the Euro

After World War II, the Americans and British controlled Western Europe. Gradually, European countries attempted to form an economic union. On January 1, 1999, the European Union replaced the different national currencies with the Euro.

Reading a EURUSD Chart

The Euro and Dollar represent the most productive geographical regions on the planet. They are the most numerous currencies on the planet. Both currencies are being challenged by other global powers rising.

The first thing to notice on this forex chart is the base unit. Are they measuring the price of 1 United States Dollar or the price of 1 Euro? Historically, the Euro has been more valuable than the United States Dollar. This means that a number higher than 1.0 on a forex chart would identify the number of Dollars it would take to purchase 1 Euro.

On the “Y” or vertical axis, you will find the value of the currency ratio. On the “X” or horizontal axis, you will find the time period. Modern currencies trade 24/7/365. You can select a range of time periods from seconds to years.

Chart Trend Signals

Markets work by matching the bid (buying) versus ask (selling) price. There will usually be a spread between the two numbers.

There are different chart types: bar, candle or line. People have their preferences. The candlestick is the most advanced.

Many experts have developed trend analysis tools to determine how a price is moving. This measures the acceleration of price changes. Common signals include the following:

  • Bollinger bands
  • MACD
  • RSI
  • Stochastic

These signals help you visualize trends more easily. These can be used to automate buy or sell orders. Some use them to prevent big losses. Once a signal point is breached, representing the break down of your strategy, you can sell and book your profits.

3 thoughts on “How to Read the USD EUR Forex Chart”

  1. There are differences between the dollar and euro.

    The first is a sovereign currency – so in principle cannot go broke as the Fed can (and does) print money if required, whatever is said on the hill. The second is a hotch-potch where there is a central bank – the ECB – but also the national clearing banks which have some influence, in the case of the Bundesbank, quite a lot. I really don’t what these national banks are there for but it does create uncertainty.

    I have yet to work out how that affects the EUR/USD but the euro must be more susceptible to political sentiment so will be less likely to reflect the underlying strength of the actual economies.

    I suspect therefore that the standard chart approaches for GBP/USD, YEN/USD etc will have substantially different characteristics.

  2. Thanks for sharing this post and letting people know about how to read forex chart. No doubt Euro is a powerful currency but on the same side you cannot neglect the importance of Dollar. The way you have explained is easy to understand for the newbie’s in forex trading.

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