HOW TO TRADE FOREX: EURO/AUSTRALIAN DOLLAR (EURAUD)
The Forex market is characterized by its dynamism. Among the wide range of currency pairs available, the EUR/AUD holds a special place due to its unique combination of European and Australian economies, with distinctive characteristics that influence their market behaviour. Trading the EUR/AUD pair requires a deep understanding of the economic factors affecting the Eurozone and Australia and an appreciation for the complexity of their interactions on the global stage.
Analyzing the EUR/AUD pair involves delving into a multifaceted analysis that spans from the monetary policy of the European Central Bank to Australia's natural resource exports, not forgetting key economic indicators such as GDP growth, unemployment rate, and inflation in both regions. This analysis becomes even more relevant during global economic uncertainty, where the pair can experience significant fluctuations. Thus, trading the EUR/AUD is not just a matter of technique but also of deep comprehension of the economic forces at play, making this pair an interesting investment opportunity for those willing to delve into the specifics that define it.
In this article, we detail the aspects you need to consider.
Top 10 Factors Affecting the Euro-Australian Dollar Pair
Monetary Policy of the Eurozone and Australia: Interest rate decisions and monetary policy set by the European Central Bank (ECB) and the Reserve Bank of Australia (RBA) can significantly impact this pair. Differences in the direction of these policies can influence capital flow between the two currencies.
Interest Rate Differentials: The differentials between interest rates in the Eurozone and Australia directly affect the EUR/AUD. Investors seek to capitalise on these differences through carry trade, which can strengthen or weaken the involved currencies.
Economic Performance: Economic indicators such as GDP, inflation, and unemployment rates in both regions provide clues about economic health and can influence the relative strength of the EUR against the AUD.
Commodity Prices: Australia is a major exporter of natural resources, including iron, coal, and gold. Changes in the global prices of these commodities can affect the value of the AUD and, therefore, influence the EUR/AUD pair.
Market Sentiment and Risk Aversion: The AUD is often considered a higher-risk currency than the EUR. Therefore, changes in global risk appetite can lead to significant movements in this pair.
Trade Balance of Australia and the Eurozone: Data on exports and imports can influence this pair, as they reflect the demand for both currencies in global trade. A trade surplus tends to strengthen the national currency.
Investment Flows: Direct and portfolio investment flows between the Eurozone and Australia can cause fluctuations in the EUR/AUD, depending on perceptions of investment opportunities in each region.
Political Events: Elections, changes in government policies, and political uncertainty in the Eurozone or Australia can directly impact the pair due to implications for economic stability and investor confidence.
Central Banks' Interventions: Though less frequent, the ECB or RBA's direct intervention or statements of intent to move their currency can influence the EUR/AUD.
Global Crises and Geopolitics: Global events such as financial crises or geopolitical tensions can affect the EUR/AUD dynamics as investors seek safety or take risks based on the development of these events.
Related Assets Influencing the Dynamics of the EUR/AUD Pair
DAX Index: Germany's leading stock index reflects the eurozone's economic health and can influence the EUR. A higher index suggests economic strength, benefiting the EUR against the AUD.
Gold Prices: As Australia is a major gold exporter, higher gold prices can strengthen the AUD against the EUR.
Iron and Copper Prices: Strength in the prices of these metals benefits the AUD, as Australia is a key exporter.
ASX 200 Index: Reflects the economic health of Australia and can influence the AUD. An upward index is positive for the AUD against the EUR.
Eurozone Bond Yields: Changes in the yields of sovereign bonds from major Eurozone countries affect the EUR. An increase in these yields may indicate a perception of higher risk or inflation expectations, potentially strengthening the EUR against the Dollar.
Top FX Trading Apps
Opening a FX Trading Account
Select a Reliable Broker: Research and choose a broker that meets your expectations regarding trading tools. The security of your funds should be your priority.
Registration: Go to the broker's website and find the option to register a new account. You will need to provide basic personal information, such as name, email address, phone number, and, in some cases, an ID document to verify your identity.
Account Verification: Brokers require a verification process to comply with anti-money laundering regulations. This usually involves uploading documents such as a photo ID and proof of address.
Initial Deposit: You can make your first deposit once your account is verified. Brokers offer different payment methods, including bank transfers, credit/debit cards, electronic payment systems, and even cryptocurrencies. Returning to point 1, if you have specific needs like "I can only use brokers that accept payment method XYZ, " choose the broker that fits your needs.
Trading Platform: With your account funded, you can now access the broker's platform. If you haven't already, now is the time to familiarise yourself with the platform. Take advantage of the demo account if it's available. It allows you to practice your trading strategies, an advantage not only for beginners but also for experienced traders who are testing new strategies or simply seeing the execution and advanced features the trading app offers.
Set Up Your Trading Space: Customize the platform according to your preferences. This includes selecting the financial instruments you plan to trade, setting up charts, and implementing any technical indicators you regularly use.
Trading Strategy: If you haven't already, define your trading strategy, including risk management. Setting loss limits and profit targets can help you keep your trading disciplined and focused on your long-term goals.
First Trades: With everything in place, you can start trading.
BlackBull Markets, founded in 2014 by Michael Walker and Selwyn Loekman in Auckland, New Zealand, has emerged as a trusted and regulated ECN broker offering access to diverse tradable instruments. BlackBull Markets stands out with its three distinct types of ECN accounts, catering to traders' varying needs and preferences: Standard Account, Prime Account, and Institutional Account.
The Standard Account is an excellent choice for traders seeking a cost-effective forex experience. It offers a convenient entry point without minimum deposit requirements and commission-free trading. Traders can access all tradeable instruments and utilize user-friendly trading platforms, including PC, Mac, mobile, and Webtrader.
The Prime Account provides a competitive edge for those looking to maximize their trading potential. With spreads as low as 0.1 pips and a commission of $6 per lot for most currency pairs, traders can benefit from tighter spreads and lower costs. The Prime Account requires a minimum initial deposit of 2000 USD and offers leverage of up to 1:500, along with micro lots for precise position sizing.
BlackBull Markets also caters to larger traders with its Institutional Account, providing a truly institutional trading experience. With a minimum initial deposit of 20,000 USD, traders can access customisable commission structures, 24/7 dedicated technical support, and a customised MAM/PAMM platform. Qualifying traders can benefit from free VPS access based on trading volume.
Regulation is key to BlackBull Markets' offering, ensuring a secure and transparent trading environment. Prominent authorities regulate the broker, including the Financial Services Commission of New Zealand (FSPR).
With a commitment to exceptional financial services and a focus on client satisfaction, BlackBull Markets has garnered a strong reputation within the industry. Their comprehensive range of over 26,000 tradable instruments, competitive trading conditions, and reliable customer support positions them as a top choice for traders seeking a trusted ECN broker.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
