Interest in trading in the Euro has grown substantially. One reason is the Euro tends to trend, as explained here, over 10-day periods, which makes it an attractive instrument for money managers. However, the Euro doesn’t offer any more opportunities for a trend than the other two markets using a three-day view.
The high correlation between the direction of interest rates (as reflected in 10-year T-note prices) and the direction of the Euro is worth considering in terms of developing a trading strategy. Traders could test strategies based on confirmation from both markets as possibly producing better returns.
(There might be a more consistent correlation between the Euro and the EMini S&P 500 if a lag is introduced.) Finally, intraday volatility is climbing in both the Euro and the E-Mini S&P 500. Traders should consider this to manage both the risk and targets for their trades.
Obviously, this analysis can be performed on other time frames and time periods. Understanding the trend and volatility characteristics over, say, 20-day periods will broaden your understanding of the market and possibly bring other trading opportunities to light.
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