EUR/USD Currency Cross
What investors and speculators need to know about the EUR/USD rate
What is the Euro to Dollar (EUR/USD)?
The Euro to Dollar exchange rate (EUR/USD or €/$ for short) is the amount in U.S. dollars that equals 1 Euro. It is the convention for quoting the exchange rate between the two currencies. This guide will provide an overview of the factors that impact the FX rate, currency risk, and what investors and speculators need to know.
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Examples of the EUR/USD Exchange Rate
Let’s look at an example of how to calculate the Euro to Dollar FX rate, and how to change between the two currencies.
Example 1:
Q: If the EUR/USD rate is 1.25 and an investor has 364 Euros, how many US dollars would they receive if they exchanged it at the current rate?
A: 364 EUR x 1.25 = 455 USD
Example 2:
Q: If the EUR/USD rate is 1.42 and an investor has 267 USD, how many Euros would they receive if they exchanged it at the current rate?
A: 267 USD / 1.42 = 188.03 EUR
Example 3:
Q: If an investor exchanges 796 USD into 610 EUR, what is the current Euro to Dollar exchange rate?
A: 796 USD / 610 EUR = 1.30 EUR/USD
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Factors that Impact the Euro to Dollar Exchange Rate
The exchange rate for the Euro to Dollar is impacted by many economic factors, as well as political events on both sides of the Atlantic. A summary of factors that impact each country is listed below.
Factors impacting the Euro side of Euro to Dollar:
- Countries that are included in the Eurozone (and changes to that list)
- European Central Bank (ECB) monetary policy
- Employment rates, job creation, etc.
- Budget deficits and national debt levels in Eurozone countries
- Domestic politics and international policies
- Economic growth in Eurozone countries
- Read more: history of the Euro
Factors that impact the Dollar side of Euro to Dollar:
- U.S. Gross Domestic Product (GDP) growth rates
- Interest rates set by the Federal Reserve (the “Fed”)
- Money supply set by the Fed
- Unemployment rates
- Trade agreements, tariffs, and duties set internationally
- The balance of payments account
- Total US national debt and annual budget deficits
- Events in the White House
- Consumer savings and household income rates
- Social Security and Medicare
History of the Euro to Dollar Exchange Rate
The chart below shows the Euro to Dollar exchange rate during the past ten years, spanning from 2008 until 2018. You will notice that the FX rate has ranged between 1.039 and 1.598 during that time period. That range is basically from near parity – almost a 1:1 exchange rate – to approximately $1.60.
From 2008 to 2014 the Euro was rarely worth less than 1.3 US dollars, however, between 2014 and 2015 it dropped all the way down to about 1.04. For three years, the FX rate remained relatively range bound between 1.04 and 1.15 until breaking out above 1.22 in early 2018.
Additional Resources
Thank you for reading this guide to understanding the Euro to Dollar exchange rate, factors that influence it, and the history over the past 10 years. To continue learning and advancing your career, these additional resources will be helpful:
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