Forex Trading Tips | Macro Econ look at EUR/USD

Forex Trading Tips | Macro Econ look at EUR/USD

Although most of our Forex Trading Tips come from hard facts and/or definitions, I am going to talk about more “big picture” situations. I have my degree in Economics and I am very much interested in the Macro-Economic analysis of the Forex Market. More precisely, the EUR/USD pair which is one of the most traded pairs on the market.

I’m not going to assume you know the ins and outs of Economic Theory and what Economists believe in what, so I am going to give you a VERY elementary definition of Macro Economics. Basically, Macro Economics takes a look at the “bigger picture” and sees what events will affect what. For example, Micro Economics will have a lot of math, and figuring out hard numbers, while Macro Economics will be more speculative and not so objective. This will be the basis of today’s Forex Trading Tips.

The Euro/USD pair (IE how many $s it takes to buy 1 Euro) has become a VERY widely researched pair because just how big the Euro and USD actually are. The Euro is the official currency for 10+ European countries, while the dollar is the official currency to the United States. Not only that, it is the “unofficial” currency for many other countries. NOW, when we add Macro-Economic factors into this pair, it can get a bit sticky.

One example is the current situation the United States is in. With manic unemployment, the student loan bubble about the burst, and the deficit growing with no end in mind, it tends to seem a bit uneasy. Let’s say that one of these examples really starts to take affect on the currency. If the dollar starts to lose it’s buying power, the Euro will shoot up in value and the dollar will lose a lot of it’s value. Pretty simple to understand right? On the other hand, the Euro has lots to be weary of as well. There is terrible unemployment in some of the countries that the Euro is the official currency of and because of that, they might be the catalyst to other very harmful actions. Such as revolt, picketing, workers striking etc… Now you don’t have to be a rocket scientist to realize that if your country is doing poorly, than your currency will be affected.

So with all this said, what is one of this week’s Forex Trading Tips going to be? BE CAREFUL AND DO RESEARCH. All of these items listed above were just items that I got off the top of my head. DO YOUR MACRO ECONOMIC RESEARCH before you invest. I would be very cautious in investing in a currency that has very shaky economic stability. In doing your Macro Economic homework, hopefully some potential pitfalls will be uncovered and you can avoid losing your money in the markets!

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