Trading The Euro
Trading The European Euro (EUR): Frankfurt, Germany is the location of the European Central Bank (ECB), central bank for its 16 member states (countries) in the Eurozone. Like the FOMC in the United States, the ECB possesses a main body with similar responsibility regarding monetary policy-making decisions; differing in that its Executive Board has a president and vice president at the head of four other members rather than the chair and the board of governors that make up the twelve of the American counterpart. Four other members make up the Executive Board and together these six also serve on the Governing Council that has representatives in the governors of the national central banks. The Governing Council carries the most weight in decision making and meets fortnightly; the first meeting of each month to assess monetary and economic issues and to make monthly monetary policy decisions and on the second meeting of the month discourse of other pertinent tasks and issues relating to the ECB and the Eurosystem takes place. The monetary monthly policy decision is explained in detail at the press conference that follows it, chaired by the President.
The primary objective of the ECB’s monetary policy is to maintain price stability by keeping inflation rates below, but close to, 2% over the medium term. Along with the jurisdiction the ECB has over monetary policy, it holds rights for issuing banknotes as deemed fit. The ECB, just as America’s Federal Reserve Bank policy-makers, may interpose when there are perceived or actual times of failure within the banks or the monetary system.
Despite the complexity of the monetary body, the actual Euro is quite simple. When compared to the US dollar, it appears that the Euro (EUR) has a tendency to be slower in comparison with its colleagues (i.e., the British Pound or Australian Dollar). Trading on a regular day, with nothing special on the horizon, the base currency may span 30-40 pips, though more volatile swings would average slightly greater, perhaps up to 60 pips. Time difference, rather ‘trading time matching’, is another thing to be considered. Euro-based pairs may be observed between 2am and 11am EST when the London /US sessions are active.
