The Euro Zone

The Euro is the world’s second reserve currency behind the U.S. dollar and the second most popular currency in the Forex market.

The Euro is the second most popular currency in the world behind the U.S. dollar. In international payments, EUR continues to rank second despite the fact that its share has been declining. As of August 2023, the euro accounted for 23-24% of SWIFT payments, while the U.S. dollar’s share was 47-48%. The Eurozone currency is just as popular in trading, with the EUR/USD pair accounting for 25-28% of trading volume in the Forex market.

The euro has a floating rate. Its value against other currencies is determined by the balance of market supply and demand. The ECB, on its part, can intervene or use monetary policy tools to move it in the desired direction by adjusting the money supply.

Market influences

The introduction of the BRICS currency: From January 2024, Argentina and several other countries may join the BRICS group. To reduce dependence on the U.S. dollar, there is consideration of introducing a single currency within the BRICS community. This could potentially impact the volume of euro transactions.

Unlike short-term time frames, EUR currency pairs do not have a high correlation with metals on long-term time frames. This might be because investors wait out a temporary surge in volatility in defensive assets, giving priority to more profitable instruments in long-term time frames.

  • Economic indicators. Macroeconomic statistics: GDP, inflation, unemployment, interest rate levels, industrial production index, consumer price index, etc.;
  • Monetary policy. ECB decisions on interest rates, money supply, currency interventions, emissions, management of foreign exchange reserves, etc.;
  • News Releases. Forecasts, plans, declarations made by the heads of central banks and other financial institutions that can determine direction of future economic policy;
  • Political situation. Elections, referendums, strikes, etc.;
  • Global events. Trade wars, conflicts, and crises can cause fluctuations in foreign exchange markets, including EUR;
  • Supply and demand. Increase in the discount rate most often increases demand for the national currency. Market makers can also put pressure on the price by placing large orders to buy/sell EUR;
  • News and events. These can affect either economy and politics, or any other areas, provided that they can influence traders’ decisions;
  • Force majeure events, geopolitical risks. These include events that can directly or indirectly affect supply chains such as pandemic, political confrontations, sanctions, etc.
  • European Central Bank (ECB) Monetary Policy Meetings: ECB meetings, held roughly every six weeks, are crucial events for forex traders. The ECB announces its monetary policy decisions, including interest rate decisions, asset purchase programs (quantitative easing), and forward guidance on future policy actions. Changes in monetary policy or hints about future policy direction can cause volatility in the Euro.
  • ECB President’s Press Conferences: Following each ECB monetary policy meeting, the ECB President holds a press conference to provide further insights into the central bank’s decision-making process, economic outlook, and policy stance. Traders closely analyze the ECB President’s remarks for clues about future policy moves and their potential impact on the Euro.
  • Eurozone Gross Domestic Product (GDP): GDP releases provide insights into the Eurozone’s economic growth and overall economic health. Positive GDP growth figures can strengthen the Euro, signaling a robust economy, while weaker-than-expected GDP growth may lead to Euro depreciation.
  • Eurozone Consumer Price Index (CPI) and Inflation Data: CPI releases measure inflationary pressures in the Eurozone economy. Higher-than-expected inflation figures may prompt speculation about tightening monetary policy by the ECB, potentially strengthening the Euro. Conversely, lower inflation figures could weigh on the Euro.
  • Eurozone Purchasing Managers’ Index (PMI): PMI surveys gauge the performance of the Eurozone manufacturing and services sectors. Improvements in PMI figures may indicate economic expansion and boost the Euro, while declines in PMI could signal economic slowdown and lead to Euro depreciation.
  • Unemployment Rate Releases: Eurozone unemployment rate data provide insights into the labor market’s health and economic conditions. Declines in the unemployment rate or better-than-expected job creation figures may support the Euro, while rising unemployment could have the opposite effect.
  • Political Events and Developments: Political events within Eurozone countries, such as elections, government formations, policy changes, and geopolitical tensions, can impact the Euro’s stability and investor sentiment. Traders monitor political developments for their potential implications on economic policies and market confidence.
  • Global Economic Trends and Events: Developments in major economies outside the Eurozone, such as the United States, China, and emerging markets, can influence global risk sentiment and impact the Euro. Traders pay attention to events like US Federal Reserve meetings, US-China trade negotiations, and geopolitical tensions for their potential effects on the Euro.


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Interconnection between economies. For example, the EUR/GBP pair is more sensitive to various internal factors than EUR/AUD;

Macroeconomic indicators of certain  EU countries. For example, if migration issues escalate in France or the situation in the banking system of Italy deteriorates, EUR can be expected to weaken against other currencies;

Forecasts. For example, actual GDP growth of 2.5% against a forecast of 3% indicates a negative trend.

When there is a political crisis in the U.S. with an increase in inflation and unemployment rates, money is transferred into EUR. When there are problems due to geopolitics and high fuel prices in Europe, money is transferred from EUR to USD. All brokers work with the EUR/USD pair. An investment portfolio with equal shares of USD and EUR is considered a portfolio protected against temporary fluctuations. EUR in pair with exotic currencies is a dangerous instrument due to sensitivity to fundamental factors and low liquidity.


The Eurozone, being a major economic bloc, conducts trade with countries and regions around the world. Some of the Eurozone’s significant trade partners include:

United States: The Eurozone conducts substantial trade with the United States, involving a wide range of goods and services.

China: China is another important trade partner for the Eurozone, with significant imports and exports between the two regions.

United Kingdom: Prior to Brexit, the United Kingdom was a significant trade partner for Eurozone countries. While Brexit has altered trade dynamics, the UK remains an important trading partner for Eurozone economies.

Other European Union (EU) Countries: Eurozone countries trade extensively with other EU member states outside the Eurozone, such as Sweden, Denmark, Poland, and others.

Emerging Markets: Eurozone countries engage in trade with emerging markets in Asia, Latin America, and Africa, importing commodities and exporting manufactured goods and services.

Other Developed Economies: Besides the US and UK, Eurozone countries trade with other developed economies such as Japan, Canada, and Australia.

The Euro’s status as a major international currency facilitates trade and financial transactions between the Eurozone and its trading partners, contributing to the Euro’s importance in global commerce.



Biggest Imports:

  1. Machinery and Equipment: Machinery and equipment, including industrial machinery, electrical machinery, and mechanical appliances, are among the largest imports into the Eurozone. These imports are crucial for various industries, including manufacturing, construction, and infrastructure development.
  2. Mineral Fuels: The Eurozone imports significant quantities of mineral fuels, including crude oil, petroleum products, natural gas, and coal. These imports are essential for meeting energy needs and fueling industrial processes, transportation, and heating.
  3. Vehicles and Automotive Parts: The Eurozone imports a large number of vehicles, including cars, trucks, and automotive parts, from both within and outside the Eurozone. The automotive industry is a key sector in the Eurozone, and imports of vehicles and parts support domestic production and consumer demand.
  4. Chemicals and Pharmaceuticals: Chemical products, including pharmaceuticals, fertilizers, plastics, and organic chemicals, are major imports into the Eurozone. The pharmaceutical industry, in particular, relies on imports of raw materials and intermediates for drug manufacturing.
  5. Electronics and Electrical Equipment: Imports of electronics, electrical equipment, and consumer electronics are significant for the Eurozone. These imports include computers, telecommunications equipment, consumer electronics, and semiconductors.

Biggest Exports:

  1. Machinery and Equipment: Machinery and equipment, similar to imports, are among the largest exports from the Eurozone. The region’s advanced manufacturing capabilities enable it to export a wide range of machinery and equipment, including industrial machinery, tools, and precision instruments.
  2. Automobiles and Automotive Parts: The Eurozone is a major exporter of automobiles and automotive parts, with several prominent automakers based in the region. European cars are exported to markets worldwide, contributing significantly to the Eurozone’s trade balance.
  3. Chemicals and Pharmaceuticals: The Eurozone exports a wide range of chemical products and pharmaceuticals to global markets. European pharmaceutical companies are leaders in drug development and manufacture, exporting medicines and pharmaceutical products worldwide.
  4. Agricultural Products: Agricultural products, including food and beverages, are important exports from the Eurozone. European countries export a variety of agricultural goods, such as wine, dairy products, meat, cereals, and fruits, to international markets.
  5. Aerospace and Défense Equipment: The Eurozone exports aerospace products and defence equipment, including aircraft, helicopters, missiles, and defence systems. European aerospace companies are global leaders in aerospace technology and defence manufacturing.650x60 100 Free training course 4

Importance of Euro

Second Most Traded Currency: The Euro is the second most traded currency in the world after the US dollar. It is widely used in global foreign exchange (forex) markets for trading and investment purposes. Its high liquidity and large trading volumes make it a key currency in international finance.

International Reserve Currency: The Euro serves as an important reserve currency held by central banks and monetary authorities worldwide. Many countries hold Euro reserves as part of their foreign exchange reserves to diversify currency holdings and mitigate currency risk.

Anchor of the Eurozone: As the official currency of the Eurozone, the Euro plays a central role in the economic and financial integration of the region. It facilitates trade, investment, and financial transactions among Eurozone countries, promoting economic stability and cooperation.

Influence on Regional Stability: The Eurozone’s economic size and stability contribute to regional and global economic stability. The Eurozone represents one of the world’s largest economic blocs, and the stability of the Eurozone economy and currency can have significant implications for global financial markets and investor confidence.

Promotes Price Transparency and Integration: The Euro’s adoption across multiple countries in the Eurozone promotes price transparency and facilitates cross-border trade and investment within the region. It eliminates currency exchange costs and uncertainties, fostering greater economic integration and cooperation among Eurozone countries.

Symbol of European Integration: The Euro symbolizes European unity and integration, reflecting the shared economic and political aspirations of Eurozone member states. Its adoption represents a significant milestone in European history and demonstrates the commitment of European countries to closer cooperation and collaboration.

Role in International Trade and Finance: The Euro is widely used in international trade and finance transactions, including trade invoicing, international banking, and cross-border investments. It provides a stable and reliable currency for conducting business transactions across borders and facilitates global commerce.

Alternative to the US Dollar: The Euro serves as an alternative to the US dollar in global trade and finance, offering diversification benefits and reducing reliance on a single currency. Its prominence as a reserve currency provides countries with greater flexibility in managing their international reserves.


Trading Euro (EUR) In The Forex Market| Key Facts To Know (