Importance of Euro in Forex

Euro is mostly traded in pair with US Dollar. It means that when the US Dollar rises against the Euro, the Euro will fall. For example, if inflation is high and the Federal Reserve lifts the interest rates, this will result in upward trend of the US Dollar and thus Euro will slightly fall. Similarly, as the majority of world oil trade is done in US Dollars, so when the oil prices move higher, the Dollar also strengthens, thus affecting the Euro to decline. Euro is largely dependent on the manufacturing industry of the countries included in Euro Zone. Better production in these countries would increase the strength of Euro.