EUR/USD quotes the number of US dollars one euro buys. That is the whole definition. Everything interesting about the pair sits underneath it: two central banks pulling in different directions, a yield gap that markets reprice daily, and a dollar that still sits on one side of almost every currency trade on earth.
Most articles about this pair publish support and resistance levels. Those levels are unprovable when written and stale within weeks. This one explains the machinery instead, so you can read the news yourself rather than copying someone else's lines on a chart.
The scale comes from the Bank for International Settlements, which runs a triennial survey of foreign exchange turnover. In April 2025 the global OTC market turned over 9.6 trillion dollars per day, up 28% from the 7.5 trillion recorded in 2022. The survey covers 52 jurisdictions and more than 1,100 banks and dealers.
The BIS publishes those tables free of charge, every three years.
The dollar was on one side of 89.2% of all trades, up slightly from 88.4% three years earlier. The euro was second at 28.9% of turnover, down from 30.6%. By individual pair, EUR/USD led with roughly 21.2% of global volume, ahead of USD/JPY near 14.3% and GBP/USD near 7.6%.
That liquidity is why the pair carries the tightest retail spreads in the market. Depth is not a marketing claim here, it is a measurable property.
The euro side belongs to the European Central Bank, whose Governing Council sets the deposit facility rate that anchors euro short term money. The dollar side belongs to the Federal Reserve, whose Federal Open Market Committee sets a target range for the federal funds rate. Both institutions aim at inflation of about 2% over the medium term, and both adjust in response to whatever their domestic data does.
Currencies respond to the gap between the two policy paths rather than to either one in isolation. When the Fed holds rates higher for longer while the ECB cuts, the interest earned on dollars exceeds the interest on euros, and capital moves toward the currency that pays more. That flow is the trend.
This is why a single rate decision rarely settles anything. What matters is the path that prices already imply, and whether the decision changes it.
A rate move that everyone expected is already in the price, and the pair often goes the other way on the announcement because traders were positioned for something more aggressive. What moves EUR/USD is a change in expected policy over the coming year or two, which shows up first in short maturity government yields and interest rate swaps rather than in the current cash rate.
Watch the two year yield differential between German and US government debt and you have a rough proxy for where the market thinks both central banks will be. When that spread widens in favour of the dollar, EUR/USD tends to drift lower. When it narrows, the pair tends to recover. The relationship is loose week to week and reasonably tight over quarters.
Real yields matter as much as nominal ones. A 3% nominal rate with 4% inflation pays less in purchasing power than a 2% rate with 1% inflation, and cross border capital eventually notices.
Policy follows data, so the releases that shift expectations are the ones that shift the pair. On the euro side, the flash HICP inflation estimate is the single most watched print, followed by PMI surveys, German business sentiment indicators and euro area unemployment. On the US side, the monthly CPI and PCE releases, the employment report, and ISM surveys do most of the work.
The surprise is what matters, not the level. A 3% inflation print that matches the consensus forecast does almost nothing; the same number 0.3 points above forecast can reprice a whole curve. Any economic calendar worth using shows the consensus alongside the release, and that column is the one to read.
Speeches and minutes fill the gaps between releases. ECB Governing Council members and Federal Reserve governors both use appearances to steer expectations, and a single hawkish remark has moved this pair more than some data prints.
You do not need a paid feed for any of it. FRED, maintained by the Federal Reserve Bank of St. Louis, carries the US series at no cost, and the ECB Data Portal does the same for euro area releases. Reuters and Bloomberg publish the consensus figures ahead of each print.
The gap between forecast and outcome is the tradeable part.
Interest rates explain the slow grind. Sentiment explains the sharp moves. Because the dollar sits on one side of nearly 89% of trades and acts as the funding currency for a large share of global activity, demand for dollars rises when the world gets nervous, and EUR/USD tends to fall in those episodes even if nothing changed in the rate outlook.
FX swaps are the plumbing behind that. They accounted for the largest share of turnover at roughly 4 trillion dollars a day in April 2025, and they are how banks and corporates borrow dollars against other currencies. Stress in that market shows up as dollar strength almost immediately.
Equity volatility, credit spreads and commodity shocks all feed into the same channel. A trader who only watches the rate differential will be blindsided by these moves, and a trader who only watches sentiment will misread the trend.
The euro area imports most of its energy, so a rise in gas and oil prices transfers income out of the bloc and weakens the currency through the trade channel. The 2022 energy shock demonstrated this with unusual clarity, when wholesale gas prices and EUR/USD fell together for months.
The current account is the slower version of the same mechanism. A bloc running a large surplus accumulates claims on the rest of the world and tends to see its currency supported over time. Manufacturing orders, export data and energy import bills are the monthly details underneath it. German industrial production and the Ifo index tend to carry more weight than the same figures out of smaller member states, simply because of the size of the economy behind them.
The channel is slow.
The US Commodity Futures Trading Commission publishes a weekly Commitments of Traders report showing aggregate futures positions by category. Anyone can download it for free. The useful signal is not the direction of the crowd but how stretched it has become: net positioning at a multi year extreme means a lot of the buying or selling has already happened, which limits how much further the move can run on new money.
Treat it as context. Weekly data is stale by the time it is published, and it covers exchange traded futures rather than the far larger OTC market.
A pip on EUR/USD is the fourth decimal place, so a move from 1.1050 to 1.1051 is one pip. Most brokers quote a fifth decimal, which is a tenth of a pip and slightly improves pricing. On a standard lot of 100,000 units, one pip equals 10 dollars. A mini lot of 10,000 makes it 1 dollar, and a micro lot of 1,000 makes it 10 cents.
Liquidity follows the clock. Volume peaks during the overlap between the London and New York sessions, which is also when spreads are narrowest, and thins out badly during the Asian afternoon and around public holidays. Spreads quoted at 0.6 to 1.2 pips by major brokers apply to those liquid hours rather than to the quiet ones.
Holding a position overnight involves a swap or rollover charge set by the interest differential, and it is a real cost for anyone holding for weeks. Retail traders usually meet the pair as a CFD or a rolling spot contract, which is a contract with a broker, while institutions trade OTC spot or CME currency futures ticker 6E with exchange margin and public settlement prices.
US clients trading through a CFTC registered firm face a cap of 50:1 on major currency pairs and 20:1 on others, set by rule rather than by broker policy. US rules also require FIFO order handling on currency positions and prohibit netting opposite positions in the same pair.
European and UK retail clients are capped at 30:1 on major pairs under ESMA and FCA product intervention rules, with lower limits on minor pairs, gold and indices, plus mandatory margin close out and negative balance protection. Clients outside those jurisdictions may be offered far higher leverage by offshore brokers, usually with none of those protections attached.
Higher leverage does not improve a strategy. It shortens the time a bad position survives.
None of this requires a price forecast, and that is the point. Keep an economic calendar with consensus figures for both blocs, mark the ECB and FOMC meeting dates plus the minutes and press conferences that follow them, and read the weekly COT release to see how crowded the trade has become. Add a check on the two year yield gap once a week, and you have the four inputs that actually explain the moves.
Then size every position so that a stop loss costs a fixed small fraction of the account, because the one thing you control is the loss, not the direction. Leveraged currency trading loses money for most retail participants, and no amount of chart reading changes that arithmetic.