Understanding EUR/USD: the world's most-traded forex pair

EUR/USD is the most-traded currency pair in the world, accounting for around 23% of total global forex turnover according to the 2022 BIS Triennial Survey. The pair quotes the price of one euro in US dollars: a quote of 1.0850 means it costs $1.0850 to buy one euro.

What drives the pair

EUR/USD is a relative-value trade between two of the largest central banks in the world. The biggest fundamental drivers are:

• Interest rate differentials between the Federal Reserve and the European Central Bank
• Eurozone vs. US growth and inflation prints (CPI, GDP, PMI)
• Risk sentiment — EUR tends to weaken in flight-to-quality episodes when the dollar gains
• Political risk in Europe (Italian budgets, French elections, etc.)
• Energy prices — the Eurozone is a net energy importer; high oil and gas hurt the EUR

Economic calendar events to watch

Two events dominate: the Fed's FOMC decision (eight times a year) and the ECB's Governing Council meeting (eight times a year). Beyond those, US Nonfarm Payrolls, US CPI, Eurozone HICP, and the Eurozone composite PMI consistently move the pair more than other prints. Mark them on your calendar — and treat them as binary risk events for any open positions.

How it behaves

EUR/USD is a relatively low-volatility pair. Average daily ranges in recent years have been around 50–80 pips. Spreads at ECN brokers are routinely sub-0.5 pips, making it the cheapest major to trade. Liquidity peaks during the London / New York overlap (12:00–16:00 UTC), which is also when most fundamental catalysts hit.