U.S. Dollar does not need any introduction as it is the king of the foreign exchange. Forex trading is rapidly increasing. People are buying and selling currencies more frequently. Popularity of the U.S. Dollar is at the charm. In short we can focus on the following points.
1. The service sector in the United States is continuously increasing.
2. It is at the top most position in the world and acting as the world’s reserve currency.
3. The prices of U.S.D. are based on the hundreds of events taking place worldwide. It is driven in both directions (up and down) by these good or bad events
Largest Economy behind the U.S. Dollar (USD)
As we know that the United States is the biggest economy worldwide. But we should not ignore the present conditions where this economy is continuously moving under debt. And the effect of total national debt can be seen on the economical activities. We can say that in future, the impact of USD may decline if U.S. does not take a major action against its debt. But if we consider foreign exchange or the forex trading, it is the largest traded currency. The EUR/USD forms a strong pair which trades the largest volume in forex trading market.
Forces moving U.S. Dollar
The currency exchange rates are being predicted on the basis of various theories based on interest rates, price levels, GDP etc. But these factors alone are not capable of deciding the value of U.S. Dollar in the forex market. This is because of thousands of financial institutes, government bodies and the retail investors are continuously engaged in buying and selling the currencies in different parts of the world. So, we can say that the U.S. dollar is driven by the forces around the globe, some of them may be in its favor and some may not. These activities may include the political instability, conditions of the war, economical instability, import and exports and the forex trading in very large volumes.
Conclusion
The prices of foreign currencies are difficult to predict in forex trading market. You can focus both on the fundamentals and the economical news for the short period of time but I would like to suggest you to be more focused on the technical analysis on the basis of strong support and resistances including some technical indicators; if you are a serious forex trader. Forex trading is not your cup of tea if you don’t have a system or plan to execute in a proper way. Before trading U.S. Dollar or Euro in the forex market, you should have an entry and exit strategy. After completing writing on the forex trading basics, I will be guiding you to the deep chart analysis, and making entry and exit strategies. Till then you continue reading about these basic things of forex trading.
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