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The euro is the second most liquid currency after the US dollar. It is then followed by the Japanese Yen and the British pound. Whilst it is possible to trade the euro versus a whole range of other currencies, the most popular are the following:
EUR/USD
EUR/CHF
EUR/ JPY
EUR / GBP
As with the other currencies, the euro trades from the open in Sydney on Monday morning, 24 hours a day until the close in the New York on Friday, which is essential Saturday morning in Sydney. The extensive trading hours mean that there are plenty of opportunities. But just because the euro trades these hours, it doesn’t mean that it trades equally across these hours. Volatility and volume can vary greatly across any one 24-hour period. You will see that spreads can often increase in those quieter periods, whilst spreads can also narrow significantly during the busier periods. Yet despite having the ability to trade round the clock you will see that most signals to trade come from the busiest periods.
EUR/USD is the most traded currency pair in the world. It is also the most liquid therefore the pair can maintain a particularly tight spread across most of the trading day. Even so, it is worth being aware of the hours that the European session and the US session trade, and within these hours economic data will be released which is likely to impact the currency pair.
The Hours
The European session opens at 07:00 GMT and continues until 16:00 GMT, whilst the US session opens at 13:00 GMT and trades until 22:00 GMT. So here we can see that the pair will be an active session for 13 hours of the day. However, this is potentially when it is at its most active, however, given that the pair is influenced by events across the globe, fluctuations can readily happen at any point in a 24-hour period.
Economic Data
European economic data is generally released at 07:00 GMT. You will often notice that trading an hour or so prior to a release and several hours following the release of economic data sees increased volatility. Meanwhile, US economic releases are often provided at 13:30 – 14:00 GMT and can generate big peaks in trading volume and strong trends for the hours following the release. When we consider that Japanese economic releases happen in the middle of the night for European traders it is easy to see why they don’t often create as much movement in the EUR/JPY as US releases cause in the EUR/USD pair.
This also applies to central bank meetings. The Federal Reserve tends to give their rate decisions at 19:00 GMT, which is still a reasonable time for European traders. The European Central Bank tends to give their rate decision at 12:45 GMT.
So whilst it is possible to trade the EUR/USD, the most traded currency pair in the world, throughout the 24 hour period, you may notice more activity and volume during certain hours when data is released or central banks make monetary policy decisions.
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