Forex trading is one of the most lucrative investments in the world. With a daily trading volume of over $5.3 trillion, it is an attractive investment option for both novice and experienced traders. Forex trading involves buying and selling currencies of different countries in pairs. The currency pairs are traded in the forex market, and the profit or loss is determined by the exchange rate of the currency pair.
Choosing the right currency pair is crucial to successful forex trading. The currency pair that is most profitable in 2020 is the USD/EUR pair. This is because the USD/EUR pair is the most liquid and widely traded currency pair in the forex market. The US dollar is the world’s reserve currency, while the euro is the second most traded currency in the world.
The US dollar is regarded as a safe-haven currency, and investors tend to flock towards it during times of economic uncertainty. This has been evident during the COVID-19 pandemic, where the US dollar has remained strong against most major currencies. The euro, on the other hand, is the currency of the European Union, which is the world’s largest trading bloc. The euro is also the second most used currency in the world, after the US dollar.
The USD/EUR pair is also affected by economic events in the United States and the European Union. The US economy is the largest in the world, and economic data such as GDP, employment, and inflation rates have a significant impact on the value of the US dollar. In the European Union, economic data such as the GDP, inflation rates, and unemployment rates also have a significant impact on the value of the euro.
The USD/EUR pair is also affected by geopolitical events such as trade wars, political instability, and natural disasters. The United States and the European Union are major trading partners, and any trade-related tensions between the two could affect the value of the USD/EUR pair. Political instability in the United States or the European Union could also affect the value of the USD/EUR pair.
In addition to economic and geopolitical factors, technical analysis is also important in forex trading. Technical analysis involves studying charts and using indicators to predict the future direction of the currency pair. Traders use technical analysis to identify trends, support and resistance levels, and other patterns that could help them make informed trading decisions.
The USD/EUR pair is also suitable for traders with different trading styles, including scalping, day trading, swing trading, and position trading. Scalping involves placing trades that last for a few seconds to a few minutes, while day trading involves placing trades that last for a few hours to a day. Swing trading involves placing trades that last for a few days to a few weeks, while position trading involves placing trades that last for several months to a few years.
In conclusion, the USD/EUR pair is the most profitable currency pair in forex trading in 2020. This is due to its liquidity, wide trading range, and sensitivity to economic and geopolitical events. Traders can use technical analysis to identify trading opportunities, and the pair is suitable for traders with different trading styles. However, traders should also be aware of the risks involved in forex trading, such as market volatility and leverage, and should only invest what they can afford to lose.
