EURZAR

EURZAR is a currency pair which involves on the world’s main currencies with one whose political upheaval make it volatile. As a currency attached to an emerging market economy, you should be aware that the South African Rand (ZAR) is a higher risk currency. This gives Forex traders ample opportunities to trade the inherent volatility which this currency pair has. 

EURZAR Live chart: Current exchange rate

EURZAR refers to the pairing of the Euro with the South African Rand. Traders buy and sell the two currencies simultaneously. When you place an order for In this example, you see the current price of the pair (as of this writing) is 13.01

EURZAR, you buy EUR and sell ZAR at the same time. EUR is the base currency; ZAR is the counter currency. 

In the EURZAR pairing, the Rand is considered “weak” compared to the Euro. Exchanging ZAR for EUR allows you to buy more euros than you would if the two currencies had the same value.

Here is a chart showing the last 12 months of prices for EURZAR.

Screenshot courtesy of TradingView!

How to trade EURZAR

Here is how it works: 

1. You place a transaction.
2. The forex broker buys the base currency (in this case, EUR) at the “bid” price.
3. The forex broker sells the counter currency (ZAR) at the “ask” price.

EURZAR key characteristics

EURZAR has been around for a while, but it is not as widely traded as some other pairings. Be aware of some unique features of EURZAR.

Volatility

This is considered an “exotic” pair because it matches a steady economy with an emerging one. The emerging economy of South Africa makes it subject to failures and setbacks, so the exchange rate can vary dramatically. 

Lower Liquidity

EURZAR is “thinly traded,” meaning there are fewer buyers for it than for more prominent currency pairs. This can make it difficult to sell because you may have trouble finding a buyer. 

Sensitivity to world events

A robust economy can withstand economic blows such as supply chain delays, recessions, oil shortages, and a fall in tourism due to COVID. An emerging economy such as South Africa can tumble due to an unforeseen event. It doesn’t have the resources and borrowing power of large economies.

Why trade  EURZAR

EURZAR is risky. But the higher the risk, the higher the potential rewards. This is what attracts traders to it. EURZAR can be a bit of a roller coaster, and the swings in the value of the South African Rand can be intimidating. But the reason to trade it is you could make higher profits than you might with more stable currency pairs. 

A EURZAR trading strategy

There are some strategies that can give you advantages.

Trade During Exchange Overlaps

Forex trades worldwide 24/7, but each exchange has its own hours. The EURZAR pair is traded mainly in Europe, so you must time your trading hours to the London Exchange. 

Many Forex traders consider the periods when trading on various exchanges overlap. They like to trade just as the London trading is approaching closing time and New York is beginning to trade. This happens around 14:00 GMT. Prices become volatile during this period, and some consider choppy prices to be an opportunity for more significant profits.

Note that these are given in GMT, so adjust them to your time zone.

• London 7:00 a.m. to 4:00  GMT
• New York 12:00 p.m. to 9:00 p.m. GMT

Trade Tops and Bottoms

You can spot reversal patterns in Forex trading if you learn candlestick trading. This is a type of chart that shows you trends and reversals in a Forex chart. Some patterns indicate that prices have hit a low and started back up, while others suggest prices have gone as high as they are going to go for a while and may begin trending downward. 

Bottoms

Here is an example of a bottom in a trend. This formation is called Three White Soldiers.

You can see that prices hit a low but rebounded, setting up a rise in prices that followed.

Tops

This is a reversal from a peak in prices. 

The price action could not move higher, and people began getting out, thus driving the price down.

There are many more top and bottom patterns. See this candlestick trading guide to build your expertise in chart reading. 

Scalping

This approach involves very quick buying and selling. “Very quick” as in as little as a few seconds or minutes. You spot a potential uptick, buy, then sell immediately. You have to make hundreds of these quick trades to make significant profits. Learn all about scalping here. 

Selection

Select the currency pairs you want to trade based on your tolerance for risk. A high-risk pair like EURZAR can present an opportunity for larger profits, but it also presents more risk. If you are new to Forex trading, you may want to consider more stable and popular pairings such as 

• EUR/USD (euro/US dollar)
• USDJPY–US dollar/Japanese yen
• GBPUSD–British pound/US dollar
• USDCNY–US dollar/Chinese renminbi
• USDCHF–US dollar/Swiss franc
• USDHKD–US dollar/Hong Kong dollar
• AUDUSD–Australian dollar/US dollar
• USDCAD–US dollar/Canadian dollar

However, if you feel you have enough expertise and time to watch your trades, it is possible to make better money in EURZAR. 

Management

Never place more than 1-2% of your account value in a single trade. You must think of Forex trades as money you can afford to lose. 

Be cautious about using leverage. This is money loaned to you by a broker. If the trade goes against you, you could lose not only your original investment, but also be unable to pay back the loan.

Use stop-loss orders. This type of order sets a price that triggers an automatic sell if EURZAR drops to a certain point. This will protect you against huge losses.

Use limit-buy orders. This sets the highest amount you will pay for a trade. Use these to protect yourself from sudden spikes where you could end up paying more for the trade than you intended. 

Avoid emotional decisions. Set your own trading rules and stick to them. If your rules say you will never stay in a trade that loses 10%, stick to it. It is common to keep hoping all the way down to a complete loss of your funds. Conversely, do not buy just because everyone else is, or because you heard a rumor. Stay calm.

News

Currency markets change based on economic data and political news. If there are surprises in this information, traders may react dramatically. 

This is not a good time to jump into a trade, hoping to make a quick profit. People with money to waste may try it, but they often lose their cash. The reason? Markets react unpredictably to news. What may seem like a good report–inflation is down, for example–may cause concern that dropping prices will reduce economic profits. Many a trader has been surprised by market reactions.

If you are already in a trade when surprise news hits, rely on your stop/loss orders. If you are out of the market at news time, wait until things settle down before you trade again.

History of EURZAR

It is valuable to understand how EURZAR has responded to world events. You can see a pattern in the reactions.

The fall of Apartheid

The Euro did not exist until January of 2002, so there was no EURZAR currency pair. However, it is helpful to compare ZAR to US Dollars to see how the Rand behaved when Apartheid fell. Here we see that the value of the Rand began a slow but steady climb as the South African stabilized and grew. This lowered the price of the currency pair USDZAR because the price goes down when the counter currency (in this case, ZAR) strengthens against the base currency.

The attack on 9/11.

In September 2001, the attack on the twin towers sent economies into a panic. Shortly after, the following January, the Euro was introduced. Those two events drove the price of EURZAR. The much more vulnerable South African economy dropped in value against the Euro, creating an uptrend in the pricing of the pair.
 

The Global Financial Crisis

In 2008, the entire world saw an economic decline that was the largest since the Great Depression. So why did EURZAR spike upward? Because ZAR dropped in value severely, the EUR didn’t suffer as much. Since EUR is the base currency in this pairing, the price of EURZAR went up. You could buy more euros with fewer Rands. 

In 2016, another financial crisis hit because of the stock market crash in China and OPEC cutting production. Oil prices rose, hurting the economy of South Africa more than it hurt Europe. The base currency, EUR, was much more valuable than ZAR, so prices increased.

COVID

In 2019, COVID brought the specter of reduced tourism, reduced travel, slower international trading, and sinking economies. Of course, being an emerging economy, South Africa suffered enormously. ZAR lost value against EUR, which drove the price of the pair up.

Possible Recession

This event has not happened, so there is no chart. But it is useful to think about what could happen. If a recession hits, it will hurt ZAR’s value more than EUR’s, so it would be reasonable to expect the price to go up. Remember, when the base currency, the first one listed in a pair, is increasingly more valuable than the counter currency, prices of the pair rise. 

Future predictions for EURZAR

Projections for currencies lose validity the further out they go, because all influences cannot be anticipated. Use these as a rough guide, not set-in-stone predictions.

Long-term predictions

The forecast for EURZAR is that it will be up 6% by the beginning of January 2026 but will drop from there. 

Medium-term predictions

The forecast is that it will be up 3.2% by the end of 2023.

The difference between trading and investing in EURZAR

You must decide what style of investor you want to be. Once you choose, you should not switch back and forth. If you do, your trades will be erratic and ill-considered. 

Let’s look at the two major approaches:

Trading EURZAR

“Trading” usually means putting your money into the short-term ups and downs of the currency. Some traders may hold a position for a few minutes, and others for a week or a month.

Because EURZAR is volatile, it works for short-term traders. They learn how to spot potential spikes and valleys in prices, and they jump in and out accordingly.

To do this, you must watch daily and hourly charts. You use your knowledge of indicators to spot favorable upticks or warning signs, and you get in and out quickly.

Investing in EUR and/or ZAR

“Investing” refers to holding a position for a year or more. It can be shorter if the market turners against you, but the idea is that you are looking for long-term trends. 

You look at charts that show several weeks or months. You do not fret over every single little trade that happens but instead, watch for major patterns that indicate a sustained trend may be forming.

The overall trend has been upward since the year 2000.

5 Tips for Successful use of EURZAR

• Pay close attention to the South African economy, and assume any economic downturn will favor a rise in EURZAR.
• Because markets anticipate things like recessions, the price tends to reflect that already. If a recession does not occur, be ready for a drop in the price of EURZAR because the ZAR may not drop in value.
• Trade using a demo account before you invest real money. You must gain experience before playing in this high-stakes game.
• Always use stop-loss orders to protect yourself from sudden downside moves.
• Only invest money you can afford to lose. Up to 80% of retail investors lose money in Forex trading.

What are the risks with EURZAR?

This is an “exotic pair.” That means one of the currencies is from an emerging market. ZAR is subject to dramatic changes in value against the Euro. This is not a trade you make then walk away. Watch it at least daily to identify sudden drops or rises in the exchange rate. 

A related risk is “getting stopped out.” That happens when you place a stop-loss order and prices temporarily dip to your stop level and your position sells automatically. Study the typical percentage changes in price and set your stop-loss orders just below that. 

Be wary of loss through leverage. If you borrow money from the broker, it is called leverage. You get all the profits from the full amount of the position (your money plus what you borrowed), but you also incur losses on the full amount. It is possible to lose all of your money.

EURZAR: General terminology

Pip – “Pip” stands for “percentage in point” and sometimes “price interest point.” It is the smallest price move for an exchange rate. Example: EURZAR can make a $0.0001 move.

Exchange Rate – The value of one currency compared to another.

Bid/Ask Spread, or Spread – The bid price is what someone will pay for the currency pair, and the ask price is what someone will accept for the pair.

Exotic Pair – The coupling of a stable currency with that of an emerging market. This is considered a higher risk. 

Risk Management – Protecting yourself against losses. For short-term traders, this can mean watching your position hourly. For longer-term investors, it means checking your position daily and weekly. It also means placing a stop-loss order.

Stop-loss Order – This is a sell order that triggers automatically when the price drops to a level you select. 

Limit Order – This is a buy order. It is the highest price you agree to pay for your trade. 

Leverage – This is a loan from the broker. You must pay it back whether your trade wins or loses.

Margin Call – A margin call occurs when you are losing money on your trade and the broker asks you to make a payment on the loan he gave you. 

Gapping – This is a “Jump” in prices without any trades between where it was and where it is. These often occur in EURZAR.

Conclusion

You can profit by trading EURZAR, but you have to know what you are doing. Study historical charts, learn about candlesticks, and pay attention to world events. And above all, protect your money against the risk of losses. There are easier pairings to learn how to trade currency pairs, so practice before you invest in EURZAR.

Frequently Asked Questions (FAQs)

Is EURZAR volatile? 

Yes. Because ZAR represents an emerging economy, prices will fluctuate quite a bit.

Why is the South African Rand called ‘ZAR’?

ZAR is an abbreviation for the  Zuid-Afrikaanse Rand  

How much is traded in EURZAR a day? 

There are about 75,000 trades daily. 

Is the South African Rand a safe currency? 

Yes and no. South Africa is not likely to go out of business anytime soon, but the economy teeters when world events are negative. 

Is the South African Rand correlated with gold?

Yes. 

Does EURZAR have a big spread when trading?

You can expect big spreads from time to time, especially when recessions and financial crises occur. 

Which is that safer currency EUR or ZAR? 

EUR is considered more stable, and therefore safer. 

Should I invest in EUR or ZAR? 

That is a choice based on your risk tolerance. EUR is more stable, but ZAR can have dramatic spikes that make you money.

Should I trade EURZAR? 

Make this choice only after you have gained some experience in trading currency pairs.