How to Hedge EUR/USD 24/7

To hedge euros in a dollar-based portfolio, short EUR/USD. To hedge a future euro payment, go long EUR/USD. Liquid's EUR/USD perpetual lets you adjust that hedge around the clock while keeping your existing currency balance.

Choose how much of the exposure to cover, then fund the position with enough margin to handle moves against it. The examples below show both a full and a partial hedge.

Which way should you trade to hedge euros?

EUR/USD means US dollars per euro. A rising rate makes euros more valuable in dollar terms; a falling rate makes them less valuable.

Your exposure, measured in USD	Unwanted move	Potential hedge
Euros held in cash	EUR/USD falls	Short EUR/USD
Confirmed euro invoice receivable	EUR/USD falls before conversion	Short EUR/USD
Euro invoice payable	EUR/USD rises before payment	Long EUR/USD
European shares	Euro falls, alongside equity risk	Hedge the currency component separately

For European shares, the currency hedge covers euro movement; the companies' share-price risk remains. These directions assume you measure returns in US dollars.

How do you size a EUR/USD hedge?

Start with the net euro amount exposed, its conversion date, and the percentage you want to hedge. Subtract euro expenses from euro revenue when their timing matches.

For a simplified linear contract that moves dollar-for-dollar with EUR/USD:

Indicative hedge notional in USD = euro exposure × EUR/USD rate × hedge percentage.

Suppose a US business expects €20,000 in two weeks and owes €5,000 over the same period. Its net exposure is €15,000. At a hypothetical 1.10 exchange rate, hedging half means approximately $8,250 of short notional, representing €7,500 of exchange-rate sensitivity.

Enter the resulting notional in the order ticket. Position size determines how much you hedge; margin determines how much room the position has before liquidation.

What happens if the euro falls after you hedge?

Consider a separate hypothetical example: you hold €10,000, EUR/USD is 1.10, and you short a linear EUR/USD contract with an initial $11,000 notional, sized to €10,000 of sensitivity.

EUR/USD at exit	Dollar value of euros	Illustrative short PnL	Combined value
1.045, down 5%	$10,450	+$550	$11,000
1.10, unchanged	$11,000	$0	$11,000
1.155, up 5%	$11,550	−$550	$11,000

This hypothetical example assumes matching prices and an open hedge, before costs. Actual results also reflect funding, fees, and the difference between perp and bank conversion prices. The short offsets euro strength as well as weakness; a 50% hedge would leave approximately half the currency movement in your returns.

Can EUR/USD really be hedged on weekends?

Yes. EUR/USD perps can trade while conventional FX markets are closed. XYZ uses external pricing from Sunday 5 p.m. to Friday 5 p.m. Eastern Time and internal pricing over the weekend or during external-data gaps.

A Saturday price can reflect expectations for the next FX session and differ from your bank's eventual conversion rate. Check the spread and available depth before placing a weekend order.

What can make a euro hedge lose money?

• Funding: A short can pay or receive funding, and the rate can change. Read how funding rates work.
• Basis risk: The perp, the bank conversion rate, and your accounting valuation can diverge.
• Timing risk: A customer can pay late or cancel an invoice, leaving a hedge larger than the actual exposure.
• Collateral risk: Changes in the value of your collateral can reduce the margin cushion.

How do you place and manage the hedge on Liquid?

1. Identify the net euro amount, reporting currency, and expected conversion date.
2. Open EUR/USD on Liquid.
3. Choose short for dollar-valued euro assets or receivables; choose long for euro liabilities.
4. Set the hedge percentage and notional before choosing leverage.
5. Review execution costs, funding, available collateral, and the estimated liquidation level.
6. Reduce or close the hedge as the euro amount changes or is converted.

A stop loss can close the derivative during an adverse move, but it also removes the hedge. Account for that in your margin and exit plan.

For a fixed payment date, compare a deliverable FX forward or buying the euros in advance. A perp offsets price movements; you still convert or purchase the currency separately.

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