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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 number of U.S. dollars for every 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, and what investors and speculators need to know.

 

Examples of the Euro to Dollar Exchange Rate

Let’s look at an example of how to calculate the Euro to USD 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 exchange rate?

A: 796 USD / 610 EUR = 1.30 EUR/USD

 

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:

  • 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:

  • 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.

 

Euro to Dollar FX Rate Chart
Source: xe.com

 

From 2008 to 2014 the Euro was rarely worth less than 1.3 US dollars, however, between 2014 and 2015 it dropped repetitiously all the way down to about 1.04.  For three years it 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 EUR/USD 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:

  • US to CAD Exchange Rate
  • Forex Trading Guide
  • Top Forex Trading Tips
  • Financial Analyst Certification

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