A guide to Eurodollar FuturesEurodollar Futures can be used to speculate or hedge Euro against the US Dollar.The Euro is currently used by fifteen countries including Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain. There are also many other nations that peg their currency against the Euro.
Euro Chart As we can see from the euro dollar chart, we can see the euro initially depreciated against the US dollar until 2000, then the currency has been slowly appreciating in the longer term ever since. Currently the record high is just shy of 1.50. Standard Euro FX Futures are traded on the Chicago Mercantile Exchange (CME). Standard contracts are valued at €125,000. The nominal value in dollars will depend on the exchange rate at the time. If the Euro Dollar rate was 1.2, the nominal value of a standard contract would be $150,000. This is simply the 125,000 multiplied by 1.2. Each pip movement on these contracts is worth $12.50. Margin requirements for this contract are initially $2,565.00 and $1,900 for maintenance. There are also mini euro futures contracts. These contracts have half the nominal value and margin requirements are half.
The Euro Dollar is one of the best trending markets and is great for momentum traders. However, Euro Futures, like all other futures must be considered high risk.
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