An example of market behaviour greater demand for the Euro might indicate a
weakening supply. Low supply and increased demand will drive the price of the
Euro up against other currencies like the dollar, until the price better
reflects what traders are prepared to pay when short supply exists. Another way
to look at this situation is this higher demand means it will cost more dollars
to buy the Euro, which equates to a weakening of the dollar in comparison.
Analysis of situations such as in this example forms the basis for a trader's
investment decisions, and they will purchase or sell currency accordingly. This
should be remembered, as while many see the foreign exchange market as the
vehicle for converting their home currency while travelling abroad, many others
choose to use the market to advance their financial position and secure their
future.
