There are very few people who hear the term “Eurodollar futures” and don’t immediately think it’s a futures contract that helps you take advantage of the EUR/USD. That’s a natural assumption to make. Forex is the biggest market in the world and said currency pair is the most actively traded one.

However, the truth is that they are something completely different. Eurodollar futures contracts are time deposits that are stored in banks outside the US, but denominated in US dollars. They are outside the FED’s jurisdiction. This means they bear higher risk, thus have higher yield.

Okay, but why is it called “Eurodollar”? When they were first launched, the dollar-denominated time deposits were held mainly in European banks. Due to this, they became known as Eurobank dollars, initially. Over the years, these instruments started spreading within banks worldwide. Today, they still retain their original name: Eurodollars.

Fun Fact: Currencies that are deposited in banks outside their home country are referred to as “eurocurrency”. For example, Australian dollars kept in a Swiss bank are considered eurocurrency.

Although not the most popular instrument, Eurodollar futures are a useful investment mechanism for both advanced and beginner futures traders. The reason being their unrivaled liquidity and long-term stability.

Whether you want to know more about Eurodollar Futures Contract or any other topics, Earn2Trade has you covered!
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0:00 Music Intro
0:13 Intro
2:15 What is the Eurodollar?
3:25 The history
5:10 Eurodollar market
7:24 Eurodollar futures
8:34 How they work
10:04 Contract specifications
11:20 Trading Eurodollar futures
13:00 Pros
14:30 Drawbacks
15:30 Final thoughts

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