Popular Forex Major Currency Pairs
Currency Pairs refers to different currencies being traded. Usually, more than two such pairs are involved in a particular Forex trading. These pairs are usually not so easily predictable because of the increased competition of both sellers and buyers. The top group includes only 7 currency pairs, all of them featuring the US dollar as a major part.
USD/JPY: USD is a topmost currency pair in Forex, mainly because of its high liquidity. On the other hand, the Japanese yen is not very strong by comparison. Thus, there is always a balance between the two. The large spread this involves keeps the two currencies strong in relation to each other. The only thing that could upset this balance is a sudden economic or political event in either country. The large spread is usually caused by too many short selling transactions on both sides.
EUR/USD/CHF: The EUR and the US dollar are also major forex currency pairs. The biggest difference between them is the global interest rates. The euro has a low interest cost, which makes EUR/USD a stronger option than USD/CHF. This is primarily because of the low exchange rate between it and the CHF. In addition, this is because of the fact that the euro exchange rate is always higher than the one between the CHF and the US dollar, making the EUR/USD a strong option in this relation.
USD/JPY: If we look at the history of the relationship between the two currencies, we can see that there is basically no relation between the two in any way. The reason is that the amount of liquidity has been reduced due to the fall in the value of the Japanese economy. On the other hand, the EUR/USD/JPY have a high liquidity factor, allowing for greater trading opportunities in either direction.
GBP/JPY: The GBP and the JPY have become an international money order type, which are traded around the globe on forex market. The reasons are many, but the most important one is that this pair was removed from the quote currency list in 2021. This means that this pair is less prone to intervention. One reason for this is that the intervention effect is much smaller when trading against the base currency of one country than when trading for the base currency of another country. This lower level of intervention makes GBP/JPY a good option in situations where a particular country needs to be supported by the international market.
USD/CAD: The CAD and the USD have been known as the international trade money pair over the last few years, due to their high levels of volatility. As mentioned earlier, they also experience low levels of intervention by the central bank, as well as the fact that they are very difficult to trade against. They have a low liquidity factor, which makes them vulnerable to big moves in the markets, which are often related to oil prices or other central economic indicators. This volatility makes them a great choice for traders looking for volatility in their currency pairs, especially those that have a relatively short duration trading plan.
USD/CHF: The Swiss Franc and the Canadian dollar have been popular choices among forex traders because of their high liquidity, which makes it easy to execute long term trades. Their low levels of volatility also make them ideal choices. However, both these pairs experience high levels of price movements, which makes it difficult to determine which of them would be the right ones for a specific trader‘s goals and objectives.
Other popular options include the AUS, AUD, GERD, GBP, NZD, and the SEK. While the Swiss franc and the Canadian dollar offer the lowest liquidity, they are also susceptible to large price movements. They are susceptible to extreme global and regional events that can have a significant effect on their performance. A major currency pair that is most vulnerable to these external factors is the Australian dollar. Due to its close proximity to the United States, its exchange rate is also subject to strong international influences, especially during times of political uncertainty and economic slowdown.