The currency I chose for this post is Euro which is the currency used in Euro Member Countries. Its currency code is EUR, which may also be represented as €. According to the Xe currency ranking, the most popular Euro conversion rate is EUR to USD (US Dollar) (Current and historical rate tables, n.d.). One of the reasons for selecting the Euro currency is that it is the second most purchased currency on the forex market after the USD and is also a key worldwide reserve currency. Furthermore, current Xe data show that the Eurozone’s central bank rate is 0.00%, and its inflation rate is 1.50% (Current and historical rate tables, n.d.). Based on the current mid-market exchange rate of 1 USD = 0.956753 EUR, $10,000 will buy 9,567.53 EUR units.
According to my forecast, the EUR-USD exchange rate will rise in the next two weeks from 1.04520 (the current EUR-USD value) to around 1.08. Following the second test of 1.0360 support in mid-June, the EUR-USD recovered only to encounter significant resistance and selling pressure above 1.06 (Current and historical rate tables, n.d.). The pair is now back above support, and a break appears on the way. Since May, the historical trend and the structure have been acceptable, and my profit strategy has been to sell rallies above 1.05. A daily close of over 1.0650 would rule out this option, and investors can aim for parity as a target (Current and historical rate tables, n.d.). Therefore, if the EUR to USD currency mid-market exchange rate hits 1.07, I will make a profit of $237.2571 by selling the 9,567.53 EUR units.
The Euro Member Countries have demonstrated their commitment to their currency and economy by keeping inflation rates low even during a worldwide crisis. Since they’re not balanced with exchange rates with other countries by the national government, they have their purchasing power. This is an essential consideration in international trade because the EUR currency is used in all foreign transactions and is not connected to a single country. As a result, keeping EUR and investing within that same currency is advantageous for any foreign business, especially given the country’s flexibility in purchasing power with exchange rates.
Reference
Current and historical rate tables. (n.d.). Xe.