E

Economic exposure Reflects the impact of foreign exchange changes

on the future competitive position of a company.

Elliott Wave Principle A system of empirically derived rules for

interpreting action in the markets. It refers to a five-wave/threewave

pattern that forms one complete bull market/bear market cycle

of eight waves.

Envelope model A band created by two winding parallel lines above

and below a short-term moving average that borders most price

fluctuations. When the upper band is penetrated, a selling signal

occurs; when the lower band is penetrated, a buying signal is

generated. Because the signals generated by the envelope model are

very short-term and occur many times against the ongoing direction

of the market, speed of execution is paramount.

Eurocurrency Currency deposit outside the country of origin.

Eurodollars U.S. dollar deposits placed in commercial banks outside the

United States.

European Coal and Steel Community European entity established in 1951

by the Treaty of Paris, with the purpose of promoting inter-European

trade in general, and eliminating restrictions on the trade of coal and

raw steel in particular. West Germany, France, Italy, the Netherlands,

Belgium, Luxembourg, and Great Britain formed this community.

European Commission The executive body of the European Economic

Community in charge of making and observing the enforcement of

policy. It consists of 23 departments, such as foreign affairs,

competition policy and agriculture. Each country selects its own

representatives for four-year terms, but the commissioners may only

act for the benefit of the community. The commission is based in

Brussels and consists of 17 members.

European Court of Justice The European Economic Community body in

charge of settling disputes between the EC and member nations. It

consists of 13 members and is based in Luxembourg.

European currency unit A basket of the member currencies. As a

composite unit, the ECU consists of all the European Community

currencies, which are individually weighted. It was created by the

European Monetary System with the eventual goal of replacing the

individual European member currencies.

European Economic Community A community established by the

Treaty of Rome in 1951, with the goal of eliminating customs duties

and any barriers against the transit of capital, services, and people

among the member nations. The signatories were West Germany,

France, Italy, the Netherlands, Belgium, and Luxembourg.

European Joint Float Agreement European monetary system

established in April 1972 by the EC members: West Germany,

France, Italy, the Netherlands, Belgium, and Luxembourg. Great

Britain, Ireland, and Denmark were admitted by January 1973. The

agreement allowed the member currencies to move within a 2.25

percent fluctuation band (nicknamed the snake). As a joint group,

the agreement allowed these currencies to gyrate within a 4.5

percent band (nicknamed the tunnel). The entire agreement was

known as the snake in the tunnel.

European Monetary Cooperation Fund EMS fund established to

manage the EMS credit arrangements.

European Monetary Institute (EMI) The new European Central

Bank created to govern the EMS. As of March 1994, it did not have

any power over inter-EMS monetary policy.

European Monetary System European monetary system established in

March 1979 by seven full members: West Germany, France, the

Netherlands, Belgium, Luxembourg, Denmark, and Ireland. Great

Britain did not participate in all of the arrangements and Italy joined

under special conditions. New members: Greece in 1981, Spain and

Portugal in 1986. Great Britain joined the Exchange Rate Mechanism

in 1990. Also in 1990, West Germany became Germany as a result of

its political unification with East Germany.

European Parliament The European Economic Community body in

charge of reviewing and amending legislative proposals. It has the

power to reject the budget proposals. It consists of 518 members

who are elected. It is based in Luxembourg, but the sessions take

place in Strasbourg or Brussels.

European Payment Union European entity instituted in 1950 to

facilitate the inter-European settlements of international trade

transactions.

European-style currency option An option that may only be exercised on

the expiration date.

European Union Treaty Treaty signed by the 12 EMS members in

February 1992 in the Dutch city of Maastricht, with the stated goal of

forming a "closer union among the peoples of Europe."

Exchange for physical (EFP) Consists of deals executed in the cash

market, outside the exchanges, for amounts equivalent to the

currency futures amount, on forward outright prices valued for the

futures' expiration. EFPs are generally quoted by commercial and

investment banks, even during regular trading hours.

Exchange rate risk (1) Foreign exchange risk that is the effect of

the continuous shift in the worldwide market supply and demand

balance on an outstanding foreign exchange position. (2) Trading

risk pertinent to market fluctuation.

Exercise (strike) price The price at which the underlying currency will

be delivered upon exercise.

Exhaustion gap Price gap that occurs at the top or the bottom of a Vreversal

formation. The trend changes direction in a rather

uncharacteristically quick manner.

Expanding (broadening) triangle A triangle continuation formation

that looks like a horizontal mirror image of a triangle; the tip of the

triangle is next to the original trend, rather than its base. (See

Triangle.)

Expiration date The delivery date.

Exponentially smoothed moving average A moving average that also

takes into account the previous price information of the underlying

currency.

Economic exposure Reflects the impact of foreign exchange changes

on the future competitive position of a company.

Elliott Wave Principle A system of empirically derived rules for

interpreting action in the markets. It refers to a five-wave/threewave

pattern that forms one complete bull market/bear market cycle

of eight waves.

Envelope model A band created by two winding parallel lines above

and below a short-term moving average that borders most price

fluctuations. When the upper band is penetrated, a selling signal

occurs; when the lower band is penetrated, a buying signal is

generated. Because the signals generated by the envelope model are

very short-term and occur many times against the ongoing direction

of the market, speed of execution is paramount.

Eurocurrency Currency deposit outside the country of origin.

Eurodollars U.S. dollar deposits placed in commercial banks outside the

United States.

European Coal and Steel Community European entity established in 1951

by the Treaty of Paris, with the purpose of promoting inter-European

trade in general, and eliminating restrictions on the trade of coal and

raw steel in particular. West Germany, France, Italy, the Netherlands,

Belgium, Luxembourg, and Great Britain formed this community.

European Commission The executive body of the European Economic

Community in charge of making and observing the enforcement of

policy. It consists of 23 departments, such as foreign affairs,

competition policy and agriculture. Each country selects its own

representatives for four-year terms, but the commissioners may only

act for the benefit of the community. The commission is based in

Brussels and consists of 17 members.

European Court of Justice The European Economic Community body in

charge of settling disputes between the EC and member nations. It

consists of 13 members and is based in Luxembourg.

European currency unit A basket of the member currencies. As a

composite unit, the ECU consists of all the European Community

currencies, which are individually weighted. It was created by the

European Monetary System with the eventual goal of replacing the

individual European member currencies.

European Economic Community A community established by the

Treaty of Rome in 1951, with the goal of eliminating customs duties

and any barriers against the transit of capital, services, and people

among the member nations. The signatories were West Germany,

France, Italy, the Netherlands, Belgium, and Luxembourg.

European Joint Float Agreement European monetary system

established in April 1972 by the EC members: West Germany,

France, Italy, the Netherlands, Belgium, and Luxembourg. Great

Britain, Ireland, and Denmark were admitted by January 1973. The

agreement allowed the member currencies to move within a 2.25

percent fluctuation band (nicknamed the snake). As a joint group,

the agreement allowed these currencies to gyrate within a 4.5

percent band (nicknamed the tunnel). The entire agreement was

known as the snake in the tunnel.

European Monetary Cooperation Fund EMS fund established to

manage the EMS credit arrangements.

European Monetary Institute (EMI) The new European Central

Bank created to govern the EMS. As of March 1994, it did not have

any power over inter-EMS monetary policy.

European Monetary System European monetary system established in

March 1979 by seven full members: West Germany, France, the

Netherlands, Belgium, Luxembourg, Denmark, and Ireland. Great

Britain did not participate in all of the arrangements and Italy joined

under special conditions. New members: Greece in 1981, Spain and

Portugal in 1986. Great Britain joined the Exchange Rate Mechanism

in 1990. Also in 1990, West Germany became Germany as a result of

its political unification with East Germany.

European Parliament The European Economic Community body in

charge of reviewing and amending legislative proposals. It has the

power to reject the budget proposals. It consists of 518 members

who are elected. It is based in Luxembourg, but the sessions take

place in Strasbourg or Brussels.

European Payment Union European entity instituted in 1950 to

facilitate the inter-European settlements of international trade

transactions.

European-style currency option An option that may only be exercised on

the expiration date.

European Union Treaty Treaty signed by the 12 EMS members in

February 1992 in the Dutch city of Maastricht, with the stated goal of

forming a "closer union among the peoples of Europe."

Exchange for physical (EFP) Consists of deals executed in the cash

market, outside the exchanges, for amounts equivalent to the

currency futures amount, on forward outright prices valued for the

futures' expiration. EFPs are generally quoted by commercial and

investment banks, even during regular trading hours.

Exchange rate risk (1) Foreign exchange risk that is the effect of

the continuous shift in the worldwide market supply and demand

balance on an outstanding foreign exchange position. (2) Trading

risk pertinent to market fluctuation.

Exercise (strike) price The price at which the underlying currency will

be delivered upon exercise.

Exhaustion gap Price gap that occurs at the top or the bottom of a Vreversal

formation. The trend changes direction in a rather

uncharacteristically quick manner.

Expanding (broadening) triangle A triangle continuation formation

that looks like a horizontal mirror image of a triangle; the tip of the

triangle is next to the original trend, rather than its base. (See

Triangle.)

Expiration date The delivery date.

Exponentially smoothed moving average A moving average that also

takes into account the previous price information of the underlying

currency.