Learn all about the daily and hourly price movements of the EURUSD, including what drives the EURUSD price, the highest/lowest volatility times of the day, hourly price movement tendencies, daily average movement, and the EURUSD’s average movement by day-of-the-week.
The Forex Trading Sessions
The forex trading sessions, and which session we are in, has a big impact on EURUSD volatility and price movement.
The forex market is open 24 hours a day, from 5 pm EST on Sunday, to 5 pm EST on Friday. 24-hour trading is possible because there are always countries open for business at all times throughout the day.
On Sunday evening, Asia and Australia open for business, then the European markets open, then the North and South American markets open. Throughout the 24-hour period, there is always a major financial center open. To name a few: Sydney, Tokyo, London, New York/Toronto. When you go to trade, no matter what time of day it is, someone is willing to transact with you, because banks, brokers, and businesses are open for business somewhere.
While there are many countries and cities open for business at any given time, many traders refer to the London, New York, Sydney, and Tokyo sessions because they are major financial centers that all link up to form a continuous 24-hour trading day.
Forex sessions in EST.
How the EURUSD Moves During the Different Sessions
As a general guideline, the EURUSD tends to move the most during the London and New York session. This is because all of Europe is trading and all of North and South America are trading at the same time. The “overlap” period between London and New York tends to see the most price action.
Mataf.net provides excellent tools for seeing how much pairs move at different times of the day.
The tools adjust to the timezone on your computer. Here is the graph of the EURUSD in Eastern Time (EST).
While the number of pips that a currency moves in a day will change over time, the highest and lowest points tend to stay the same. For example, we can see that the activity in the EURUSD picks up at 0300 when London opens (or even 0200 when Germany opens). After that, movement tends to stay elevated, but sees a spike near when the US opens at 8AM.
There is the highest amount of movement typically when London and New York are both open, from 0800 to 1100. I enjoy trading around this time. But really any time between about 2 AM and 11 AM EST is good for day trading the EURUSD…that’s a big window.
Then action tapers heading into the US close and then usually stays pretty quiet until London is about to open again. The quietest time to day trade is between Noon and 1 AM EST. There is usually less movement and the price is more choppy during this time.
EURUSD Average Daily Price Movement (in pips)
I also like to look at how much the EURUSD is moving, on average, for the entire day. For example, I may see that the EURUSD is moving 70 pips per day (average over the last 10 weeks). I then set my y-axis on my day trading chart each morning to show about 70 pips of price action. This keeps the scale of my chart roughly the same day after day.
I like the chart on Investing.com that shows how volatility changes over time. You can set how far back you want to go, such as 3, 6, or 12 months. If you notice that you are getting a lot more trades, while day trading for example, or a lot fewer trades, it will often have to do with how much overall movement there is each day.
As volatility drops, my strategies tend to get fewer signals, while in high volatility I tend to have more trades, generally. Seeing the overall daily volatility helps me understand and see why this is happening. If I didn’t look at this, I may start wondering why no trades are popping up, then questioning myself or forcing trades when I shouldn’t be.
During this particular time, the profit potential from day trading 1 to 2 hours a day dropped by about half from earlier in the year compared to the right side of the chart (see the weekly and monthly trade reviews). And that makes sense. The EURUSD was moving much less than it was prior.
If you weren’t aware of this, you may think you were doing something wrong because you went from making $10,000 a month to making $5,000, for example. But when we realize that the price was moving half as much, we can accept the EURUSD is just in a slower time, and thus there will be fewer trading opportunities. We can ease off a little, and take advantage of the opportunities that do arise, as opposed to trying to force trades when there is little movement/opportunity.
The reverse is true when volatility is high. The more price movement, the more opportunity. We want to be aware of that so we are in the right mind frame to take advantage.
Volatility by Day of Week
I don’t do anything with this, but post it more for interest. Some days tend to be more volatile than others.
The following is a 50-week average, so it includes almost a year’s worth of price action. Monday tends to be a little lower volatility than the rest of the days of the week. Wednesday tends to be the most volatile day of the week. This is also from Mataf.net. If you notice your profits are a little lower on Monday than most other days, it may not be your weekend hangover, it may be that Monday’s tend to be a bit quieter in the EURUSD.
Cory Mitchell, CMT
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.