The euro currency index reflects average fluctuations of the world’s five major currencies (USD, GBP, JPY, CHF, and SEK) to the euro. The euro currency index, or EURX, was established in January 13, 2006, and is quoted on NYBOT. The index represents a benchmark for the euro value calculation against other participants of the financial markets.
EURx = 34.38805726*EURUSD^(0,3155)*EURGBP^(0.3056)*EUR/JPY^(0.1891)*EURCHF^(0.1113)*EURSEK^(0.0785)
EURindex computer indicator shows the price changes in the euro currency index, which are entailed by price fluctuations in other major currency pairs on Forex.
From practical point of view, there are two ways of using the index for trading EUR/USD and other currency market instruments on Metatrader. The first one is associated with crossovers, and the second one is based on divergence.
- In case the euro index crosses the 50 SMA and 100 SMA to the upside or to the downside, it can be either a buy or a sell signal respectively. There are many ways to profitably exit the trade, taking into account a crossover. However, it is not recommended to use a reversal signal for closing a position.
- If the currency pair price chart demonstrates a descending move while the EURX is going up, then divergence is observed. Thus, currency pair quotes are likely to grow soon.
- On the other hand, if the EURX is sliding down amid the price surge, it can be a notable clue that the market might turn downwards.