As the world prepares for the upcoming European Union summit, one of the largest financial markets is experiencing its biggest crisis in many years. The European Central Bank’s decision to raise interest rates for the second time this year has been met with both optimism and disappointment among investors. Investors who were optimistic about the possibility of a weaker euro have lost faith in the central bank’s ability to manage the situation effectively. This article will discuss some of the most important factors influencing the European Union’s market for interest rates and how traders should respond to the situation.
The largest most-trading currencies are EUR/U.S., EUR/JPY, and EUR/U.K. news that directly affects the euro or Switzerland franc will often be felt more on EUR crosses than those of other currencies. News from the United Kingdom will significantly influence EUR trades. The recent political developments in the United Kingdom have greatly impacted markets for interest rates. The British public will vote on whether or not it will remain in the European Union in an election scheduled for June.
Traders will need to be very alert for announcements from political and international news events. The euro is also affected by global political news, and traders who can anticipate the political decisions of countries surrounding the European Union will have a leg up on the markets in terms of liquidity. Another factor that can impact trading volumes is the U.S. Federal Reserve. Investors who can predict when the Fed plans to increase interest rates will profit in both EUR/USD and EUR cross trades.
One of the biggest issues that influences the European markets is how well a country is performing financially. Investors who can accurately predict how the government of a country will be able to pay its debts will have a leg up on the EUR cross market. Many investors are worried about the effects that the economic situation of Cyprus has had on the euro, and there are fears that Cyprus will lose control of its money supply if the Cyprus government does not act soon to reduce its massive debt.
If you can predict any of these factors, you will often see a spike in trading volume immediately following news about the situation in a particular country. In fact, many traders use news to exploit the situation and start a position immediately upon announcement. For example, news about a new Greek bailout or a Chinese stimulus plan can cause traders to jump in with both feet in anticipation of an uptrend.
If you want to get ahead of the curve, you should start reading news before it happens. In fact, the most important piece of information that you should follow and understand is news about a country’s economic situation. After the news is out, you should make a list of your favorite country currency pairs. You can then compare the currency pair that you find most interesting and start making your positions accordingly.
Some traders will wait for news on news that has already happened before they make a move, but if you wait too long, traders who wait, they might miss an opportunity to make a profit. Some traders may choose to wait until all the news is out and then begin to speculate. By waiting, the trader may miss a chance to capitalize on the news that may be in the market the next day.
It is a good idea to have news in the trading room prior to making any trades. When you have an overview of the news, you can see whether you can use it as leverage for making trades. It is possible to double your profits if you hold a position that is based on the news of the previous day. If you have any reason to believe that a particular country’s government will not be able to make the debt payments, the news may provide the opportunity for you to move your trading position.