EUR/USD in one paragraph
EUR/USD is the price of one euro in US dollars. It is the most actively traded pair in the world, about 24% of global daily FX turnover according to the Bank for International Settlements. Medium-term direction is dictated by the gap between US 2-year Treasury yields and German 2-year Bund yields: when US 2-year yields rise faster than German 2-year yields, EUR/USD falls, and the other direction is also reliable. Daily ranges of 50 to 80 pips are typical, the London-New York overlap (8 AM to 12 PM ET) is the highest-liquidity window, and on MT5 at LHFX the pair runs raw spreads from 0.0 pips with $3 per side commission and leverage up to 1:500.
Why EUR/USD is the deepest market on Earth
EUR is the euro, the single currency of 20 European Union member states with a combined GDP of roughly $18 trillion. USD is the US dollar, the unit of account for around 58% of global foreign-exchange reserves and the invoicing currency for most cross-border commodity trade. EUR/USD is the price discovery channel between the two largest reserve currencies in the world.
The Bank for International Settlements runs a Triennial Central Bank Survey of FX turnover every three years. EUR/USD has topped that survey since the euro launched in 1999, currently sitting near 24% of all daily spot, forward, and swap volume across every pair, every venue, every currency. Daily global FX turnover is around $7.5 trillion, which puts EUR/USD turnover at roughly $1.8 trillion every business day.
That scale matters for retail traders in two concrete ways. Spreads are the tightest in forex, frequently 0.0 to 0.2 pips during the London-New York overlap, because order books are deep enough to absorb large flow without slipping. And the pair is harder to push around than smaller crosses, which makes technical levels and macro themes more reliable; you are trading the same chart that every central bank, hedge fund, and corporate treasurer is watching.
BIS triennial survey. In the latest BIS Triennial Central Bank Survey, EUR/USD accounted for 22.7% of average daily turnover across the spot, outright forward, and FX swap markets. No other currency pair is within 10 percentage points. USD/JPY is second at around 13.5%, GBP/USD third at roughly 9.5%.
Pips, lot size, and pip value on EUR/USD
A pip on EUR/USD is the fourth decimal place of the quote: 0.0001. If the price moves from 1.0850 to 1.0851, that is one pip. Most MT5 servers, including LHFX, also quote a fifth decimal (a pipette or fractional pip), so you will see prices like 1.08507, where the trailing 7 is one tenth of a pip.
A standard lot on EUR/USD is 100,000 units of the base currency, so 100,000 euros. Pip value on a standard lot is fixed at $10 per pip in the quote currency, because 100,000 x 0.0001 = $10. On a 0.1 lot (mini) the pip value is $1; on a 0.01 lot (micro) it is $0.10. Pip value is constant for EUR/USD specifically because the USD is the quote currency.
Margin requirements scale with leverage, not pip value. At LHFX EUR/USD runs up to 1:500 leverage, so a 0.1 lot position at 1.0850 (notional 10,850 USD) needs roughly $22 in margin (0.2% of notional). The same position at 1:30 effective leverage would require around $362.
The spread on EUR/USD is quoted in fractional pips. A raw spread of 0.2 means 0.2 pips. On a 0.1 lot that costs $0.20 per round trip in spread, on top of the $0.60 commission ($3 per side, but lot size scales the commission down for mini lots). For a full standard lot the round-trip cost is $6 in commission plus typically $2 to $4 in spread during London-NY hours.
Worked example
You are bullish on EUR/USD because German 2-year Bund yields are rising faster than US 2-year Treasury yields. You open a 0.1 lot long position at 1.0850. Pip value is $1 per pip. Price moves to 1.0910 over the next two days (a 60-pip gain). Profit is 60 x $1 = $60. Margin used was about $22 at 1:500 leverage. If price had instead moved to 1.0790 (60 pips against you), the loss would be $60 and a stop loss at 1.0810 (40 pips) would have capped it at $40.
What actually moves EUR/USD
Headlines change every hour. The drivers below are the ones that actually print on the chart, in rough order of medium-term reliability.
The 2-year Bund-Treasury yield spread
This is the single most reliable medium-term driver of EUR/USD. The 2-year US Treasury yield reflects market pricing of the next 24 months of Federal Reserve policy. The 2-year German Bund yield reflects the same window for the European Central Bank. When the spread widens in favour of US yields (Treasuries higher relative to Bunds), EUR/USD typically falls because capital reallocates to higher-yielding dollar assets. When the spread narrows or flips toward Bunds, EUR/USD rises. The correlation runs around 0.7 to 0.8 over multi-month windows and is far more reliable than any single news headline.
Federal Reserve policy
FOMC rate decisions (eight scheduled meetings a year), the post-meeting press conference, and the quarterly Summary of Economic Projections (the dot plot) are the largest single-event drivers of EUR/USD. A hawkish surprise (faster hikes, slower cuts, higher terminal rate) strengthens USD and pushes EUR/USD down. A dovish surprise does the opposite. Moves of 60 to 150 pips inside the first two hours of an FOMC release are normal.
European Central Bank policy
The ECB Governing Council also meets eight times a year, with a press conference 45 minutes after the rate statement. ECB hawkishness lifts EUR/USD; dovishness drags it down. The key difference from the Fed is that the ECB sets policy for 20 countries with very different fiscal positions, so the press conference often does more work than the headline rate move. Watch the staff projections and any language on the pace of balance-sheet runoff (PEPP and APP).
US and Eurozone data releases
Non-Farm Payrolls (first Friday of the month), US CPI, US PCE, and ISM PMIs move EUR/USD on release because they shift Fed expectations. On the Eurozone side, flash CPI (end of each month), German Ifo, and Eurozone composite PMI carry the most weight. Single-data surprises of more than two standard deviations from consensus typically produce 40 to 80 pip moves in the first 30 minutes.
Risk sentiment and capital flows
EUR/USD has a modest risk-on tilt: equities up, EUR/USD up, on average. The mechanism is capital flow. During severe risk-off events the US dollar acts as a global safe haven and EUR/USD can drop 100 pips in a session even without any euro-specific catalyst. The clearest tell is whether the move is happening against every G10 currency at once (USD strength) or only against EUR (euro weakness).
CFTC positioning and option skew
The CFTC Commitment of Traders report releases every Friday afternoon and shows net speculative positioning in EUR futures at the CME. Extreme net long or net short positioning often precedes mean reversion. Risk-reversal skew on one-month EUR/USD options (available on Bloomberg and several free dashboards) shows the relative demand for puts versus calls and is a useful contrarian signal at extremes.
European energy prices
This driver matters in years where Europe faces energy stress (2022 was the textbook case). Higher natural gas prices in Europe widen the EU current-account deficit, weaken EUR, and pull EUR/USD lower. In normal energy markets this driver is negligible. When TTF gas futures move 20% or more in a week, the channel reactivates.
When EUR/USD actually trades
EUR/USD trades 24 hours from Sunday 5 PM ET through Friday 5 PM ET. Liquidity is not constant: spreads stay tight by historical forex standards across the whole week, but volume and volatility concentrate inside two specific windows.
The London-New York overlap is the biggest single window. From 8 AM to 12 PM ET, both major centres are open and the order book is at its deepest. This is when most economic releases hit (8:30 AM ET is the US data slot), and it is where roughly 40% of EUR/USD daily volume gets transacted.
Asian session. Tokyo and Singapore trade EUR/USD but flow is thinner. Daily ranges of 15 to 30 pips are typical. Good for accumulating positions, weaker for short-term breakout trading.
London session opens. Spreads tighten, volume picks up sharply. Major European economic releases (German CPI, Ifo, Eurozone PMIs) print between 2 AM and 5 AM ET. Most of the morning EUR/USD volatility happens here.
London-New York overlap. Highest liquidity of the day. US data hits at 8:30 AM ET (NFP, CPI, retail sales). FOMC and ECB decisions are both released inside this window most months. Roughly 40% of daily volume.
New York afternoon. London closes around 12 PM ET, volume thins. The 4 PM London fix (11 AM ET) can produce sharp moves into the close as month-end and quarter-end rebalancing flows transact.
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How Fed-ECB divergence reads onto the pair
EUR/USD is a relative trade: it does not care what the Fed does in isolation or what the ECB does in isolation, only how the two compare. The same rate decision can move the pair up or down depending on what the other central bank has just signalled.
Fed hawkish, ECB neutral
Classic dollar-strength setup. The Fed signals more hikes or slower cuts than markets expected, the 2-year Treasury yield jumps, the Bund-Treasury spread widens against the euro, EUR/USD falls. Typical first-day move is 80 to 150 pips lower. Watch the dot plot and the post-meeting press conference.
Fed dovish, ECB neutral
Mirror of the above. The Fed cuts more or signals more cuts than priced, 2-year Treasury yields drop, the spread narrows, EUR/USD rallies. The 2024 to 2025 Fed cutting cycle produced multi-week rallies of 300 to 500 pips off this exact setup.
ECB hawkish, Fed neutral
The ECB pushes back on rate cut expectations or hikes longer than expected, German 2-year Bund yields rise relative to Treasuries, EUR/USD lifts. The Eurozone inflation surprises of 2022 to 2023 produced this dynamic repeatedly. Lagarde's press conferences often do more work than the rate statement itself.
ECB dovish, Fed neutral
The ECB cuts faster or signals weaker growth, Bund yields fall, the spread widens against the euro, EUR/USD drops. This setup tends to play out across days rather than minutes because ECB dovishness usually arrives via growth downgrades rather than rate-cut surprises.
Divergence (both move opposite directions)
The largest moves happen when the Fed and ECB move opposite ways inside a few weeks of each other. Examples: Fed hawkish + ECB dovish has produced multi-month EUR/USD declines of 8% to 12%. The 2014 to 2015 episode (Fed hiking guidance, ECB launching QE) drove EUR/USD from 1.40 to 1.05.
Convergence (both shift the same way)
When both central banks pivot in the same direction inside a tight window, EUR/USD often stays range-bound because the relative spread does not move much. The pair grinds inside 200 to 300 pip ranges for weeks. This is the worst environment for trend-following strategies on EUR/USD.
EUR/USD versus the other USD majors
EUR/USD is the obvious starting point for most forex traders, but the other dollar majors trade with different drivers and risk profiles. Here is how they line up on the metrics that matter for sizing and strategy.
| Pair | Daily range | Main drivers | Typical cost | When to pick it |
|---|---|---|---|---|
| EUR/USD | 50 to 80 pips | Fed-ECB rate spread, US-EU growth gap | 0.0 to 0.2 pips + $6 round trip | Lowest cost, deepest liquidity, cleanest macro signal |
| GBP/USD | 80 to 120 pips | BoE policy, UK fiscal and political news, Fed | 0.2 to 0.4 pips + $6 round trip | Higher volatility, headline-driven, room for bigger swings |
| USD/JPY | 60 to 100 pips | US-Japan 10-year yield spread, BoJ policy, risk flows | 0.1 to 0.3 pips + $6 round trip | Best proxy for US Treasury yields, sharp on risk-off |
| USD/CHF | 40 to 70 pips | SNB intervention, EUR/CHF correlation, safe-haven flows | 0.2 to 0.4 pips + $6 round trip | Cleanest safe-haven trade, useful as EUR/USD hedge |
EUR/USD wins on cost, liquidity, and signal clarity. If you are learning how a macro thesis prints on a chart, this is the pair to study because the 2-year Bund-Treasury spread does most of the explanatory work.
Pick GBP/USD when you want more daily range for a fixed account size, USD/JPY when your view is really a Treasury-yield view in disguise, and USD/CHF when you want to express a safe-haven thesis without the euro's idiosyncratic risk.
Trading EUR/USD at LHFX
At LHFX, EUR/USD runs on MetaTrader 5 with STP/ECN execution. Orders are routed to the market without a dealing desk, and the cost stack is broken into a raw spread plus a flat commission so you can see exactly what you are paying.
Up to 1:500. The cap is a ceiling, not a recommendation. Most experienced EUR/USD traders run effective leverage between 1:20 and 1:50.
From 0.0 pips during the London-New York overlap. Asia-session spreads occasionally widen to 0.4 to 0.6 pips.
$3 per side, $6 round trip on a standard lot. Scales linearly with lot size, so a 0.1 lot round trip costs $0.60.
MetaTrader 5 (MT5). Windows, macOS, web, iOS, Android. Custom Expert Advisors and indicators supported on the desktop build.
STP/ECN. Orders routed to market liquidity without a dealing desk. No requotes on EUR/USD in normal conditions.
Sunday 5 PM ET through Friday 5 PM ET. 24-hour pricing with a brief daily rollover window around 5 PM ET.
100,000 EUR per standard lot. Minimum order size 0.01 lot (1,000 EUR notional). Pip value $10 per standard lot, $1 per mini lot, $0.10 per micro lot.
See the full EUR/USD instrument page for live spreads, swap rates, and contract specifications. Compare all spreads and fees and review leverage tiers before you size your first position.
What can go wrong on EUR/USD
EUR/USD is the lowest-volatility major forex pair on a percentage basis, but four specific risks have produced the worst retail losses we see in account audits.
Event-driven gaps and spikes
FOMC, ECB, NFP, and US CPI releases can move EUR/USD 60 to 150 pips inside two hours, with the bulk of the move in the first ten minutes. Spreads widen by 5x to 10x in those first minutes. Position sizing that ignores the calendar produces blown stops and slippage.
Risk-off USD strength
In severe risk-off events (major bank failures, geopolitical shocks, liquidity crises), the US dollar acts as the global safe haven and EUR/USD can drop 100 to 250 pips in a session even with no euro-specific catalyst. The 2020 March crash and the 2022 September UK gilt episode both produced this dynamic.
Leverage abuse at 1:500
At 1:500 a 20-pip adverse move can wipe 10% of account equity on a single position. The 1:500 cap exists because LHFX clients are professional and self-directed; it is not an instruction to use it. Effective leverage of 1:30 or lower is the conservative baseline for EUR/USD.
Clustered macro calendars
FOMC, NFP, US CPI, and ECB often fall inside the same two-week window. Three or four high-impact prints inside ten trading days can produce 400 to 600 pip ranges with very little intraweek trend. Trend-following systems blow up; range strategies thrive. Know the calendar before you commit a position.
Risk warning. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.