How Does the Euro’s Trading Range Stack Up Historically?

September 17, 2008

Since the beginning of the year, the EUR/USD has had a trading range of 21 big figures or 2100 pips.

The high of 1.6038 was set back in July and while the low (so far) of 1.3882 was hit last Friday.

With an average annual range of 1900 pips since the Euro’s inception, the move may seem unprecedented to many traders. However that is not true, in 2003, the EUR/USD had a 2300 pip range and in 2002, the range was approximately 2200 pips.

On a percentage basis, the range that we have seen thus far pales in comparison to the move that we saw in 2003.

Nonetheless, EUR/USD 1 month volatilities continue to be at the highest level since 2001. For currency traders, the latest move in the EUR/USD compared to its move historically suggests that 1.3882 is not far from the bottom in the EUR/USD and it should just be a matter of time before the dust settles and the volatility and trading range of the EUR/USD starts to contract.

The offsetting factors of negative news in the US banking system and the substantial decline in oil prices could be what keeps the EUR/USD range bound (albeit a wide range).

Posted in EURJPY Record High, eur/usd, euro