WHAT IS THE EUR/USD CURRENCY PAIR?

‘EUR’ is used to describe the Euro, the currency of the European Union (EU), while ‘USD’ represents the United States Dollar. The US Dollar is the most traded currency on the forex market, and the Euro is the second most traded currency. Combined, the Euro-Dollar is the most popular currency pair in the world, commanding nearly 23% of FX transactions according to the Bank of International Settlements.

The nickname given to the EUR/USD pair is ‘Fiber’, which is a play on the fact that the Euro is newer to the market than ‘Cable’ – the nickname given to the GBP/USD pair.

A BRIEF HISTORY OF EUR/USD

Designed to facilitate cross-border trade between EU nations, the Euro was launched on December 31, 1998 at a rate of 1.1686 US Dollars. Initially a digital accounting currency, it entered circulation within 11 EU countries on January 1, 2002 and ended that day of trading at a rate of 0.8605 US Dollars. Its use has since expanded to include 19 of the 28 EU members, though UK is working towards leaving as an EU member.

EUR/USD rocketed from 0.8625 to 1.5830 between January 2002 and March 2008, in part due to an increase in trade between EU countries. However, it fell significantly as a result of the 2008 financial crisis – hitting 1.2674 in February 2009. The pair’s value fell further in the years that followed as liquidity for US Dollars tightened and EUR/USD fell to 1.0500 in early 2015.  Since then, Euro-Dollar has traded roughly between 1.0500 and 1.2500 (as of October 2018).