Euro exchange rate and currencies of any country are influenced by many factors. If you know and understand them, you will be able to significantly increase the efficiency of trading. The most popular currencies are the dollar and the euro. They’re used in calculations all over the world. Today I want to tell you about the main factors that participate in the formation of the single European currency exchange rate.

What Affects the Euro Rate

On Euro exchange rate the dynamics of demand on the dollar influences. If investors are more interested in USD, they sell Euro and vice versa in order to buy dollars. That is, their funds flow from one currency to another depending on the macroeconomic or political situation in the U.S., Eurozone and around the world.

Which concerns the economy, the euro is significantly influenced by the following indicators:


This is the number that is published monthly. It’s a consumer price index. In essence, it is a customer’s assessment of changes in the prices of various goods and services. For the European currency, the importance of this index in the largest economies of the euro zone is particularly important – Germany and France. And, of course, in the Eurozone as a whole. By tracking the CPI, we can predict the direction of the Euro/USD pair movement. If the index is higher than the forecasted value, we can expect the euro to rise in price, if lower – the decrease in its value.

GDP dynamics

This report is usually accompanied by a sharp increase in market activity. Accelerated economic growth in the euro area has always led to an increase in demand for the single currency. And that makes sense. Investors prefer to invest in countries and regions with strong gross domestic product growth. If the next report on this indicator turned out to be better than what analysts and economists expected to see, the market will most likely react with the growth of the euro. If the data are weak, the sales of a single currency may increase.

Engagements of the ECB chapter

The speeches of the head of the European Central Bank may be quite informative regarding further plans for changing the policy of the regulator in the field of finance. Which, of course, will affect the euro exchange rate. In addition, the nature of the presentation should always be assessed. Positive mood will strengthen the single currency, neutral mood will not have a significant impact on the market. Well, if the speech is negative, we can expect a weakening of the Eurozone currency.

Investor sentiment

Its level is determined by the index of economic sentiment in the largest economy of the euro zone, which is Germany. It’s easy to read. If the value of this index is in the positive zone (above zero), then the sentiment of investors is okay. This will be a bullish factor for the euro exchange rate. If the indicator will be in the negative zone (below zero), then there is a high probability of a drop in demand for a single currency.

Trade balance

It is a simple logic here. If the export volume of Germany and France grows, it means that the demand for European currency will also grow. It will be necessary to pay for the goods supplied from European countries.

I have told you today about the most important indicators on which the Euro exchange rate depends. If you closely monitor their publication in the news feeds, you can improve your trading results.

Fyodorov’s Inga