The euro is administered by the EU Central Bank (ECB). Due to its status as a establishment regulatory bank, its remit is a little different than the US Federal Reserve, for instance. The ECB is concerned solely with IRs and maintaining price stability within the Eurozone, while the Fed Reserve and most other nationwide central banking institutions also need to consider the effects of their choices on employment levels.
This implies that the ECB has a more hawkish approach to rates. This means that they tend to favor a rise in rates. They’re going to put the IRs up quicker than the FR would when prices rise, and are less likely to lower them when costs fall. This means that changes in something similar to the retail price index in Germany won’t affect EUR IRs and therefore the cost of the euro in the same way that a similar scenario in America might affect the cost of the dollar. Another 5 use the EUR but aren’t official EMU members.
Particularly, the UK is in the ECU but doesn’t use the EUR, while Switzerland is not a member of the EU in any way. This means that the fundamental factors influencing the price of the EUR depend mainly on the business situation in just four EU nations. Together, they produce 75% of the GDP of the Eurozone.
Hence the currency exchange trader who is concerned in EUR trading wants to look out for major industrial announcements in those four countries while understanding the economic situation in other european nations will have far less of a repercussion on EUR trading.
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