With the fifth-most market capitalisation of the globe, the euro is the currency of preference for many traders on the Forex exchange. However, most retail traders prefer to trade the US dollar as their main currency since it is less affected by global news and is more stable. If you are planning to start online trading, you need to keep a track of the changing trends of the Forex markets, especially the US dollar. This will help you stay one step ahead of your competitors. The EUR/USD and CHF/USD are the currency pairs that you need to keep an eye on.
EUR is the currency in which you make the maximum profit when trading in international markets. The single currency pair EURUSD is a leading worldwide currency pair which has been going up for the past few years. This means that you have a very good chance of earning returns if you purchase the EURUSD in its weak state. However, there are major risks associated with such a move. You may face a sharp loss if the EURUSD loses value against the Swiss franc due to any number of reasons. On the contrary, when the EURUSD strengthens against the Swiss currency, you have a high probability of earning returns on your purchases.
USD is another currency pair which has been on a winning streak over the past few years. As compared to the other currencies in the forex market, the EURUSD has been able to sustain higher values despite global market volatility. This means that investors have managed to take advantage of this uptrend. In fact, this currency pair has been considered as a major player on the global stage and is expected to continue moving upwards.
CHF is the currency in which the EURUSD and CHF are based. There are many reasons why traders prefer to deal with the CHF rather than the US dollar. For instance, the CHF is the last currency in the world which is based on a floating exchange rate. Unlike the US dollars, it does not follow a daily exchange rate. This means that the CHF is prone to undergo significant changes every day.
In addition to this feature, CHF is not a main trading currency pair in the forex market. This means that this currency pair is only traded on specific hours. The time of trading is mostly fixed and is known as closing prices. Traders do not have to pay higher commissions for trades in this currency pair unlike the other currencies.
This is why the CHF has become the popular choice among most traders. In fact, this is also the main reason why many investors prefer to deal in this pair. The CHF is based on floating exchange rates and this means that it follows a supply and demand policy. In this case, if there is more demand for the EURUSD, then EURUSD would be more profitable. However, if there is less demand for the EURUSD, then the CHF will be the more profitable option for investors.
Traders and investors who are willing to invest money in foreign exchange markets should know that the Swiss National Bank has the control over the Euro and Swiss francs. The Swiss National Bank controls the amount of Swiss francs that are allowed in the foreign exchange market. Because of this, most Swiss currency investors try to take advantage of the free trade policies of the National Bank. This is the main reason why the Swiss National Bank allows free trade in the Swiss francs. Moreover, the Swiss National Bank has the mandate to intervene in the foreign exchange market and make decisions according to the interest of the Swiss economy.
The Swiss National Bank is the third largest financial institution in Switzerland. The third largest bank in Switzerland is the Credit Suisse. These three banks control 80% of the Swiss Franc and they make most of their trading profits from the sale of the Swiss Franc. Most of the foreign exchange brokers offer Forex trading on the Swiss franc. Many foreign currency investors use the Forex Market to make a profit.