Euro Exchange Rate Graph 2010 – The Exchange Rate Of The US Dollar Expresses Its Performance

Euro Exchange Rate Graph 2010

The exchange rate of the U.S. Dollar, as seen on a US Dollar exchange rate history chart, expresses the dollar’s performance relative to the currency with which it has been paired for a specific comparison. How the U.S. Dollar has fared against the British Pound, for example, may not indicate its performance against the Swiss Franc or Japanese Yen.

As the most traded currency in the world, the dollar (U.S.) is a part of every major trade made in FOREX, or the foreign exchange market. Its coupling with the Euro Dollar is, in fact, the most common trade on the board. An investor making this bet is either buying the Euro (EUR) and selling the US Dollar (USD) in a long position or selling the Euro and buying the USD if he is going short.

When 730 delegates from the forty-three nations allied with the U.S. during WWII met in a New Hampshire hotel in July of 1944, history was made. At this meeting of the United Nations Monetary & Financial Conference, several things were accomplished, including formation of the International Monetary System (IMF) and implementation of the Bretton Woods System of monetary policy. Euro Exchange Rate Graph 2010

A glimpse at a US Dollar exchange rate history chart for this time reveals the strength of the dollar as compared to other international currencies. The war, however, was very expensive to wage and things needed to be settled regarding international financial policy. Member nations agreed at this time to implement monetary policies in their respective countries that would ensure the exchange rates of their currencies were kept within certain boundaries and in accordance with the value of gold.

When the U.S. elected to go off the gold standard in 1971 during Richard Nixon’s presidency, this changed everything. With the dollar no longer tied to the price of gold, which was a unilateral decision on the part of the United States, this freed them up to print whatever amount of money they chose.

This action consequently caused world currencies to ‘float’, with their values figured on a new, speculative basis rather than being backed by something tangible like gold. Currency exchange rates now change constantly, often buffeted about by political news and market sentiment. Speculators now rule the financial markets.

All major trades in FOREX include the U. S. Dollar being traded against another major currency. These include The Swiss Franc, the British Pound and the Euro, Canadian and Australian Dollars. If a US Dollar exchange rate history chart is to provide a true representation of actual dollar strength or weakness, it should show the relationship of the USD against all of these other major currencies simultaneously. Euro Exchange Rate Graph 2010

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Dollar Euro Exchange Rate Graph – How to Fix (or Lock Into) A Foreign Exchange Rate

Dollar Euro Exchange Rate Graph

If you’ve ever had to exchange foreign currency you will know the frustration of not being able to accurately calculate how much of one currency you will need to give in order to obtain a set amount of another at some point in the future, due to fluctuations in the exchange rate. Dollar Euro Exchange Rate Graph

We certainly used to have this problem, but then discovered a way in which is possible to lock in at the present rate or even better, and at an exchange rate better than we would have ever obtained from our bank.

Choose your own currency exchange rates – using Limit & Stop orders

Let’s say you want to sell US dollars to buy 2,000 Euros sometime within the next month.

While the present eur to usd buy rate of say USD/EUR 0.70 is acceptable to you, let’s say that based on your reading of commentary about the Euro exchange rate against the US dollar, or your reading of the charts you believe that it’s likely the US dollar may strengthen against the Euro in the coming week, and you decide you would be happy to transact at USD/EUR 0.73

So, right now you will need USD $ 2,857 to buy 2,000 Euro at USD/EUR 0.70

If the euro rate moves in your favour you can reduce it down to $ 2,739 to buy the same 2,000 Euros at USD/EUR 0.73.
This would save you $ 118 ! Every little helps, and it might as well be in your pocket.

Ideally you want to get a better euro rate, so all you need to do is go to your dealer’s website (details later) and set a LIMIT order at your target rate of 0.73. Just in case your assessment is wrong you also set a STOP order at 0.69, which is the worst rate at which you are willing to transact.

So, you’ve decided the most you want to pay is USD $ 2,898 to buy the 2,000 Euros at the USD/EUR 0.69 worst case rate

You place your order, and now if your dealer’s euro buy rate hits 0.73 between now and the expiry date you have set (e.g. for the rest of today or maybe 1 month into the future, depending on your requirements) your transaction will be executed at 0.73. Likewise, if during that time price fails to hit 0.73 but slides back to 0.69 your transaction will be done at 0.69.

Of course your decision from the outset might have been that if price never hits 0.73 you don’t want to transact at all, in which case just set the limit order and don’t bother with a stop order.

The currencies section of the website listed at the foot of this article shows you exactly how to do this transaction. Dollar Euro Exchange Rate Graph

Book a fixed currency exchange rate now for the future – using Forward Contracts

If however you need to be certain of the exact rate you will get in the future, you may prefer to use a forward contract.

Let’s say that you are in New Zealand and have done business with someone in the US and agreed a price with them today in US dollars of let’s say $ 20,000, which seemed acceptable to you based on today’s currency exchange rate of NZD/USD 0.68

Your supplier’s terms are one month, so you know that one month from now you will have to pay the agreed US dollar amount.

You obviously don’t want to buy the US dollars now and have all your cash tied up waiting a whole month for the invoice to come in, but at the same time you are worried that between now and next month the US dollar might really strengthen against the New Zealand dollar.

Right now the USD $ 20,000 would cost you NZD $ 29,412 which is acceptable to you.

But if the US dollar strengthened and the rate changed to NZD/USD 0.61 by next month you would have to find NZD $ 32,787.

That might not be acceptable to you! In fact it might even wipe out your profit margin.

So, what if you could lock the currency exchange rates you saw today when you agreed the US dollar price ? Many dealers offer the facility of buying a Forward Contract. This enables you to see a rate today which you can book now for a transaction you want to conduct at a future date. Hence the foreign exchange risk is completely removed from your transaction and you can sleep easy at night.

Most dealers’ websites are available 24 hours a day when the forex markets are open, ensuring that you can lock in your rate exactly when you want it.

We’ve found the above services invaluable and have saved us a lot of money.

Extra spending money for the holidays

Even if you’re not transacting large sums, these tools can still save you money. For example we like to holiday in Europe each year and so need to buy some euro currency at some point during the year. As well as our every day bank accounts we’ve also opened an account with our bank denominated in Euros. (Any major bank will let you open a foreign currency account).

We know how much spending money we want to bring with us, so we just target a currency exchange rate we would be really happy with and place an order up to 6 months before we’re going to go over there.

Sometimes the rate (limit order rate) is hit earlier than we expect and the Euros land in our account months before we go on holiday, earning us a little extra interest too, but if this doesn’t happen then we just take the rate that’s available a few days before we go on holiday. All in all not a bad way of earning a little extra spending money for the holidays! Dollar Euro Exchange Rate Graph

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Challenges For The Euro Exchange Rate In Times Of Crisis

During the years, scholars, acting CEOs and Forex market players wrote piles of books devoted to the challenges the euro is facing or will face in the future. Some of them insisted that the euro is an artificial currency, which will fail to survive the first more serious financial crisis. Others claimed that the single European currency is destined to prevail over all other major world currencies. The truth is somewhere inbetween these contrasting statements.

The euro achieved a generally accepted status as a leading currency in less than a decade. It also challenges the position of the U.S. dollar as the worlds top reserve currency. The euro managed to maintain relative stability and a high euro exchange rate against other leading currencies. Nevertheless, the euro faces many challenges in the years to come.

According to Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB, the three main challenges for the euro area are the following: implementation of structural reforms that will eliminate cross-country differences in real economic performance, introduction of stricter financial discipline in the sphere of public finances and adoption of stricter policies for risk management in the financial sector. Whether these policies will be successfully implemented is an open question but the euro exchange rate will depend heavily on such measures. It is an elementary truth that the economic performance is the main pillar of a stable exchange rate so the first challenge mentioned should be a priority, analysts agree.

Another factor that would assist the euro in maintaining a higher exchange rate is the elimination of public and private imbalances, an indicator closely watched by the European Central Bank and the finance ministers of the countries in the Eurozone. In addition, the role of the ECB is not only to guard the euro but also to contribute to the global economic governance, as described by the ECB Chairman Jean-Claude Trichet.

This means that sometimes the ECB could be forced to intervene in the market to support not only the single European currency but the global financial stability as well. The euro will face this new and challenging role in the years to come and the euro exchange rate against the other major currencies will be a factor of increasing importance to the future of the global financial world.

The markets determine the value of a particular currency but the market players behaviour is influenced by decisions taken at a political level. Trading currency pairs is a game for professionals although their decisions rely on policies implemented by governments. Therefore, the main challenges for the euro are related to the implementation of well-considered and reasonable policies by the governments of the countries in the Eurozone. During the peak of the global crisis, the euro managed to survive and enjoyed relatively moderate fluctuations; the serious challenges are thought to be still ahead.

Dr Timothy Ross is an expert on the financial markets. Recommendation: If you need to make a large or regular euro payment consider the help of a euro exchange rate specialist as an alternative to your bank.

The Unpredictable Character Of British Pound And The Euro Exchange Rate

Britain is one of the few founding members of the European Union refusing to accept the euro as a national medium of exchange. Many people in the UK believe that a possible adoption of the euro will affect the local economy and the euro exchange rate will prevent the booming of the British financial sector and other sectors of the economy. Several successive British governments decided not to join the euro, favouring the pound as a national currency, while the debate about the future adoption of the euro still goes on.

This debate does not influence directly the currency exchange rates of the British pound and market observers often witness the euro exchange rate and the British pound exchange rate going simultaneously in the same direction against the U.S. dollar, for instance. The pound exchange rate depends on the same factors, which determine the value of all other currencies: the state of the economy, inflation, unemployment, etc. Since the British economy is closely tied to that of the Eurozone and the entire European Union, the British pound often gains against the U.S. dollar in times when the entire Eurozone is booming and the euro exchange rate is strengthening as well.

You should not take such a development of the two exchange rates for granted, though. Many situations might occur when the British pound will not follow the exchange rate of the euro and would gain or lose in value against the single European currency. Interest rates influence directly the currency exchange rates, for instance; but with interest levels of 0.5% in 2010, the lowest level ever, the Bank of England cannot take advantage of this tool to correct the exchange rate of the pound so other factors are more important in determining the exchange rate. Those other complex factors determine the mutual exchange rate of the two currencies as well as their correlating market moves so if you want to exchange your pounds for euro or vice versa it is a good idea to consult a Forex expert for advice when and how to conduct such a currency exchange transaction.

The euro exchange rate is susceptible to influences related to releases of official economic data and even market rumours and the market can give you a bitter surprise if you have decided to play on the Forex market unprepared and without proper market knowledge. The euro exchange rate against the British pound can hit a record low against the pound, following market rumours or comments by a financial tycoon like George Soros. You can hardly follow all the data and comments that determine the GBP/EUR exchange rate in contrast to experienced Forex traders who are doing this as a routine. The euro exchange rate can be a tricky one to follow so you have to realise that conducting profitable currency exchange transactions is about deep knowledge of the market and dilettantes can lose their money in seconds.

Dr Timothy Ross is an expert on the financial markets. Recommendation: If you need to make a large or regular euro payment consider the help of a euro exchange rate specialist as an alternative to your bank.

Euro Exchange Rate Trend Against The U.s. Dollar

One of the pillars of the status of the United States as a global super power is its currency, the U.S. dollar, which served as a major international reserve currency in the decades following the World War 2. Recently, the U.S. dollar faces increasing pressure from a newborn currency; namely, the common European currency, the euro, which is evolving into a new major reserve currency and this situation affects the euro currency rate against the dollar.

In the first couple of years, following its introduction, the euro remained weaker than the U.S. dollar but in the next few years the Forex traders witnessed a stable upward trend and the euro currency rate against the American currency gradually increased.
The euro and the U.S. dollar represent a major currency pair, which is among the most traded on the Forex markets and the euro exchange rate is crucial not only for currency trades but for all governments in the Eurozone and the countries whose national currencies are pegged to the euro. The euro exchange rate vs. the dollar also serves as a major indicator to compare the economic development of the European Union and the United States, respectively.

In general, the governments have one major tool to influence the exchange rate of the euro against the dollar; namely, the interest rates. It is a powerful weapon in the hands of the central banks although the Federal Reserve and the European Central Bank (ECB) use it with caution. The ECB prefers not to interfere directly in the Forex markets and tries to influence the euro exchange rate utilising different means the central bank governors possess.

The euro exchange rate is also very sensitive to data about the Eurozone and the economic development of the participating countries. In May 2010, the euro hit a 14-month low against the U.S. dollar on news that Greece experience serious financial troubles and rumours that the financial aid for the country can hamper the financial stability of the Eurozone.

Another property of the euro exchange rate against the dollar is its volatility, which could reach up to 4 per cent in a single trading day. The biggest daily gain of the euro vs. the dollar was on March 18, 2009 when the common European currency jumped by 3.9 per cent against the dollar, according to Reuters data.

Historically, there were many gains and slumps of the euro currency rate vs. the dollar but most analysts agree that the common European currency will continue to be relatively strong against the dollar in short- and mid-term. However, the Forex market is a sophisticated one, characterised by extreme volatility, so any forecasts can prove untrue in a few minutes. That is why all Forex experts and economists around the globe watch closely the exchange rate of this famous currency pair.

Dr Timothy Ross is an expert on the financial markets. Recommendation: If you need to make a large or regular euro payment consider the help of a euro exchange rate specialist as an alternative to your bank.

Euro Exchange Rate Graph Today – Understanding Forex Trading

Euro Exchange Rate Graph Today

The Foreign Exchange market, also referred to as the “Forex” or “FX” market, is the largest financial market in the world, with a daily average turnover of well over US $ 1 trillion – 30 times larger than the combined volume of all U.S. equity markets. The word FOREX is derived from the words FOReign EXchange. Euro Exchange Rate Graph Today

Spot and Forward Foreign Exchange

Forex trading may be for spot or forward delivery. Spot transactions are generally undertaken for an actual exchange of currencies – delivery or settlement – for a value date two business days later.

Forward transactions involve a delivery date further in the future, sometimes as far as a year or more ahead. By buying or selling in the forward market, it is possible to protect the value of any anticipated flows of foreign currency, in terms of one’s own domestic currency, from exchange rate volatility.

Difference Between Foreign Currency and Foreign Exchange

Anyone who has traveled outside their country of residence would have had some exposure to both foreign currency and foreign exchange.

For example, if you live in the United States and travelled, lets say, to London, England you may have exchanged your home currency i.e. US $ for British Pounds. The British Pounds are referred to as a foreign currency and the act of exchanging your US $ for British Pounds is called foreign exchange.

The Foreign Exchange Market

Unlike some financial markets, the foreign exchange market has no single location as it is not dealt across a trading floor. Instead, trading is done via telephone and computer links between dealers in different trading centres and different countries.

The FX market is considered an Over The Counter (OTC) or ‘interbank’ market, as transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as it is with the stock and futures markets.

Reasons for Buying and Selling Currencies

Through the mechanism of the foreign exchange market companies, fund managers and banks are enabled to buy and sell foreign currencies in whatever amounts they want. The demand for foreign currency is stimulated by a number of factors such as capital flows arising from trade in goods and services, cross-border investment and loans and speculation on the future level of exchange rates. Exchange deals are typically for amounts between $ 3 million and $ 10 million, though transactions for much larger amounts are often done.

There are two basic reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.

Currency Speculation

Speculators desire to trade forex for the opportunity to profit from a movement in currency exchange rates. For example, if a trader believes that the Euro will weaken relative to the U.S. dollar, then the trader can sell Euros against U.S. dollars in the Forex market. This is referred to as being “short Euros against the dollar” which, from a trading perspective, is the same as being “long dollars against the Euro”. If the Euro weakens against the dollar, then the position will profit

For speculators, the best trading opportunities are usually with the most commonly traded and therefore most liquid currencies, called “the Majors.” Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. Euro Exchange Rate Graph Today

True 24 Hour Market

Forex is a true 24-hour market and trading begins each day in Sydney, and moves around the globe as the business day begins in each financial centre, first to Tokyo, then London, and then New York. Unlike any other financial market, traders can respond to currency fluctuations caused by economic, social and political events at the time they occur – day or night.

As with all financial products, FX quotes include a “‘bid” and “offer”. The “bid” is the price at which a dealer is willing to buy – and clients can sell – the base currency for the counter currency. The “offer” is the price at which a dealer will sell – and clients can buy – the base currency for the counter currency.

The US Dollar is the Centre-piece

The US dollar is the centre-piece of the Forex market and is normally considered the “base” currency for quotes. In the “Majors,” this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $ 1 USD per the other currency quoted in the pair. The exceptions to USD-based quoting include the Euro, British pound (also called Sterling), and Australian dollar. These currencies are quoted as dollars per foreign currency as opposed to foreign currencies per dollar.

What Affects the Currency Prices

Currency prices are affected by a variety of economic and political conditions, most significantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention.

Any of these factors, as well as large market orders, can cause volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to “drive” the market for any length of time.

Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities. Fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumour.

Rewards and Risks in the Forex Trading Market

Trading foreign currencies is a challenging and potentially profitable opportunity for educated and experienced traders.

However, there is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency.

Moreover, the leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin call within the time prescribed, your position will be liquidated and you will be responsible for any resulting losses.

Before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, you should not invest money you cannot afford to lose.

As an investor you may lower your exposure to risk by employing risk-reducing strategies such as “stop-loss” or “limit” orders.

There are also risks associated with utilizing an Internet-based deal execution software application including, but not limited to, the failure of hardware and software. Euro Exchange Rate Graph Today

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Sterling Euro Exchange Rate Graph – Historical Perspective

Sterling Euro Exchange Rate Graph

The mechanism that drives Euro exchange rates is called ERM (European Exchange Rate Mechanism). It is basically a system brought forward in Mar 1979, by European Community. It was introduced as a part of EMS (European Monetary System). Its principal aim was to lower the unpredictability of Euro exchange rates, and to get a stable currency system throughout Europe. This led to the formation of EMU (Economic and Monetary Union), and thus Euro was introduced on 1st Jan 1999.

When Euro was introduced, there was a major change in currency policies and the countries not falling in the Eurozone were linked to Euro using conversion. This made them have a common currency, acting at the apex. The major aim was to achieve currency stability, along with to have a mechanism for evaluation of possible members of Eurozone. This mechanism or technique is called ERM2.

ERM has its base in the system of fixed currencies, and fixed margins of exchange rates, though the exchange rate itself could be variable- as long as it stays in the margins. It is also called a semi pegged mechanism. Before Euro was introduced, exchange rates followed the ECU (European Currency Unit). The value of this unit was computed by including all the participating currencies and finding a weighted average. Sterling Euro Exchange Rate Graph

There is something called a parity grid (commonly known as grid). It consists of bilateral rates, and it is computed based upon central rates (as expressed by ECUs). Since the margins were fixed, currency fluctuations could not be more than 2.25 percent on either side. Italian Lira was an exception, which could fluctuate by 6 percent.

It is worthwhile to discuss Pound Sterling as well. UK entered ERM in 1990. However, it had to exit within 2 years, since Pound Sterling faced major pressure from currency explorers. On 16th Sept 1992, there was a major crash, which was called Black Wednesday. This crash brought major political changes in UK.

In 1993, the variability margins were relaxed to 15 percent with the introduction of French Franc in the currency system.

It was on 31st Dec 1998, when the ECU was frozen, and launching of Euro was decided. On the following day, i.e. 1st Jan 1999, Euro was introduced as the major currency of European markets.

Summarizing it all, Euro has faced a lot of changed in all these years. In a broader sense, EMU can be considered as an earlier version of Euro. But since it had fixed margins, it was very difficult to place it in the world market. To solve this problem, Euro was thus lunched on the first day of 1999. Sterling Euro Exchange Rate Graph

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Dollar Euro Exchange Rate Graph – Euro and US Dollar Exchange Rate

Dollar Euro Exchange Rate Graph

The Euro has come a long way since it entered into circulation on January 1st, 2002. It is now the official currency of 16 of the 27 member states of the European Union (EU) – with the notable exception of United Kingdom, and is consequently used daily by some 327 million Europeans.

Most experts in the Financial world thinks that the US Dollar will continue to depreciate against the Euro over time, with the Euro taking over US Dollar as the world’s undisputed reserve currency eventually. However, during the financial crisis that started in late 2008, many banks and companies became bankrupt and investors started to find solace in putting their money into stable foreign exchange, Gold and commodities. This became a boon to US dollar (and the Japanese Yen) and there was a sharp appreciation in the US Dollar against most of the world’s major currency – including the Euro. Dollar Euro Exchange Rate Graph

China, Russia and India (major global investors in the US Dollar) have long indicated that they want to see changes in the international monetary system in the wake of the financial crisis. They are however, careful to not push their desire for change too far in case the dollar slumps. This will lead to the value of their HUGH dollar-denominated investments plummet, something that will not bode too well with their tax payers.

The main difference between the Euro and the US Dollar is time. US dollar has been around in circulation much longer, therefore it is deemed as more reliable. Fundamentally, the Euro is almost as stable as the US dollar now with the backing of the European Union, a coalition of European nations. The perception to the ability of Euro to withstand any financial/global/economic crisis will gradually improve over time. This is especially true as more countries and sovereign wealth funds (SWF) starts to buy into Euro as reserve.

So at least in the short-medium term, Uncle Sam’s note is still the global money people turn to. Dollar Euro Exchange Rate Graph

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