When to Buy or Sell a Currency Pair?



We’ll be using a fundamental analysis in order to make a right decision whether to buy or sell a particular currency pair.

EUR/USD

With the currency pair EUR/USD, the euro is regarded as the base currency. It will serve as the basis for the buy/sell.

If the U.S. economy is experiencing economic instability and will continue to weigh, which you believe will have a negative impact on the U.S. dollar, you would execute a BUY EUR/USD order. By doing so, you have bought euros with anticipation it will rise versus the U.S. dollar.  

On the other hand, if the U.S. economy continues to strengthen and the euro will weaken against the U.S. dollar, you would execute a SELL EUR/USD order. By doing so, you have sold euros with expectation that it will decline versus the US dollar.

USD/JPY

With the currency pair USD/JPY, the U.S. dollar is considered as the base currency. It will serve as the basis for the buy/sell.

If the Japanese government is to devalue the yen to help its export industry, you would execute a BUY USD/JPY order. By doing so, you have bought U.S. dollars with anticipation it will rise versus the Japanese yen.

Moreover, if you think that Japanese investors is to pull money out of U.S. financial markets and converts back all their U.S. dollars to yen. You will be executing a SELL USD/JPY order because you knew that it will take effect on the U.S. dollar. By doing so, you have sold U.S. dollars in the probability that it will devalue against the Japanese yen.

GBP/USD

With the currency pair GBP/USD, the pound will settle as the base currency. It will be the main basis for the buy/sell.

If you suspect the British economy will be lucky to do better against the U.S. regarding economic growth, you would execute a BUY GBP/USD order. By doing so, you have bought pounds with the speculation that it will rise over the U.S. dollar.

Furthermore, if you conclude that the economy of Brittain slows down while the U.S. economy continue to strengthen like Jack Bauer, you would be executing a BUY GBP/USD order. By doing so, you have sold pounds with the assumption that it will downgrade over the U.S. dollar.

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