Hidden Markov models - EUR and USD
The EUR/USD is the most commonly traded pair in the Forex market. Their popularity can be attributed to the fact that each currency represents the world's two largest economic and trading blocks and many multinational corporations that conduct business across the Atlantic.
Price movements for this currency pair are generally related to factors that influence the value of either the EUR or the USD. As the world's most liquid currency pair, the EUR/USD offers tight spreads and constant liquidity for traders who are looking to instantly buy or sell. The combination of stability and volatility makes the EUR/USD an excellent pair for beginner and advanced traders. The EUR/USD pair offers traders high liquidity and has very tight and competitive spreads. The relative strength of the US economy and the European economy, which can be tracked through the daily news, generally influence this pair.
Getting ready
In order to apply the hidden Markov model...