What is the "eurodollar" futures contract? What determines if it goes up or down in value?

Answer 1

A Eurodollar Deposit is like a CD (Certificate of Deposit) -- only it is deposited in dollars in a foreign bank (it doesn't have to be in Europe -- just outside the US). These deposits are actively traded.

A futures contract on Eurodollar Deposits is a contract to deliver or accept a deposit at a fixed point in the future. Since deposits gain interest, the contract loses money when Eurodollar rates go up and gains when Eurodollar rates go down. The futures price changes by $25 for each basis point change in rates. A basis point is 1/100 of a percent.

Answer 2

A Eurodollar futures contract is an interest rate product. Essentially, eurodollars are US dollars deposited outside of the US. You can find a very detailed description on CME's website.