Volatility is the key factor that causes a rise or fall in asset value. No volatility means no trading. Volatility has the power to increase the trading outcome. That’s why many traders look for highly volatile assets to get started.
Identifying most volatile forex pairs is a difficult task. Market Investopedia can help you with that. Read our blog to find out the most volatile currency pairs and tips to trade them for high returns with limited risk.
Understanding Forex Volatility
Volatility refers to the extent or degree of fluctuations that occur in the asset price over a period. More volatility means significant price swings and less volatility means low price swings.
Forex is a market that offers significant volatility to traders. When choosing a currency pair, volatility is a must. The amount of profit or loss depends on how volatile the asset is.
Generally, currency pairs sensitive to market change have high volatility. Such pairs react quickly to changes in economic, fundamental, and geopolitical conditions that lead to significant opportunities.
5 Most Volatile Forex Pairs 2025
Volatility can increase your profit, but it can even increase the loss amount. That’s the reason why many traders are scared of trading highly volatile currency pairs.
In the forex market, there are many volatile pairs. However, not all are suitable for trading. As the market conditions of some volatile pairs are unpredictable, that makes currency trading far more difficult.
But not to worry. We have prepared a list of pairs that are volatile but not difficult, and volatility lovers can surely consider them:
AUD/USD:
The combination of Australian and United States Dollars got first place in our list. The two are the strongest economies with different market conditions. On the one hand, the US enjoy a strong dominance in the political market. On the other hand, Australia leads the world in the commodity sector.
A change in the commodity market dynamics or export or import conditions affects the AUD Value. Traders can watch these dynamics and identify potential opportunities in the pair. Also, traders looking for AUD/USD alternatives can consider NZD/USD or AUD/JPY. Even these two pairs offer significant volatility.
A quick glance
USD/JPY (US Dollar/Japanese Yen) The USD/JPY pair is a favorite among traders due to its strong correlation with US Treasury yields and risk sentiment. The Bank of Japan’s stance on monetary policy, with US economic data, will impact this pair’s volatility in 2025.
GBP/JPY (British Pound/Japanese Yen): The GBP/JPY pair combines the volatility of the British Pound with that of the Japanese Yen. It is considered one of the most volatile currency pairings due to the influence of economic statistics from both the UK and Japan, as well as political happenings affecting these two countries.
Of all the pairs mentioned in our table, the EUR/JPY, NZD/USD, and AUD/USD are the most trending currency pairs at the moment. Although these trends are not exceptionally powerful, they have created multiple trading opportunities during the last 12 months. But What About the Other Pairs?
This means that, on average, the EUR/USD pair moves 0.0100 (or 100 pips) every day over this period. Traders can use this information to evaluate probable price movement and create stop-loss orders or take-profit goals accordingly.
These top forex pairs always include the US dollar and another currency from a major global economy. For example, the euro (EURUSD), British pound (GBPUSD), Japanese yen (USDJPY), Swiss franc (USDCHF), Canadian dollar (USDCAD), Australian dollar (AUDUSD), and New Zealand dollar (NZDUSD).
USD/JPY:
The Japanese yen is the strongest Asian currency, that saw significant price swings against the US dollar. The country leads the world in the automation and technological sector. In addition, the Bank of Japan’s interest rate decisions and announcements have a potential impact on the US dollar and Japanese Yen price relationship.
The pair saw potential price fluctuations even on the intraday basis, making it the most volatile forex pair for scalping. Traders can trade the pair during the overlap hours of the Asian and US sessions, as most price movements occur during these hours.
GBP/USD:
Britain and the United States are two regions with great political dominance globally. The changing economic and political conditions gave birth to numerous opportunities for the pair. Volatility lovers can pair the US Dollar against the British Pound.
The overlapping hours of the New York and London sessions offer the best market conditions to trade this pair. Major news, economic data and reports of both regions were released during these hours. As a result, traders can identify potential trading opportunities and significant volatility for trading this pair.
USD/ZAR:
When it comes to exotic pairs, almost every other pair is highly volatile. As exotic pairs contain the currencies of underdeveloped countries. So they saw large swings against the US Dollar. Also, trading highly volatile exotic pairs is far more risky than trading major pairs.
Even after that, many advanced traders go for exotic pairs as the profit is also higher. Thus, if you want to trade a highly volatile exotic pair, you can trade the South African Rand against the USD. The pair is so volatile that you can see high up-and-down price swings on the candlestick charts in a short period.
South Africa is also a major gold exporter, so the USD/ZAR pair is highly correlated with gold prices. This means that when gold prices rise, they will positively impact ZAR and vice versa. So, gold traders can surely consider this pair for trading.
USD/MXN:
Exotic lovers can also consider Mexican pesos for trading. The pair is already quite volatile, and the political tensions between the two countries make it far more volatile. The countries have had trade ties for a long time. Changes in tariffs, trade, or overall diplomatic policies give birth to significant opportunities in the market.
The fees for trading this pair are comparatively lower than EUR/USD or other major pairs. Also, the pair has a strong correlation with the prices of oil. Changes in the crude oil market affect the prices of USD/MXN, so traders can take advantage of these correlations.
Tips to Trade High Volatility Currency Pair
Practice Risk Management:
Trading high volatility pairs with the aim of making high returns may look fascinating, but it’s actually not. Volatility is like a double-edged sword, and high volatility may result in high risk.
One can blow the entire capital just by trading high volatility pairs. Risk management can save you from this. For volatility trading, traders should trade with a proper risk-to-reward ratio, appropriate margin, and leverage. Also, traders should use stop loss to control their losses.
Go for Diversification:
Do not put all your money in highly volatile currency pairs. Trading a high-volatility pair is already risky, and when traders invest all capital in such a pair, the risk further increases.
The best way to trade volatility is to spread capital into pairs of different volatility levels. Traders can also consider other market assets, including gold, crude oil, stocks, indices, and cryptocurrencies, for diversification.
Work on your Psychology:
For volatility trading, the right psychology is a must. The process is risky, so it has a significant impact on psychology. So, volatility traders should have control of their minds. Trade decisions should not be affected by emotions such as greed, anger, FOMO, and frustration. In addition, they should practice discipline and patience. So that even if the market moves against their predictions, they can make further trade decisions accordingly.
Keep a watch on Market Fundamentals: Fundamentals are the major reason that results in market volatility for almost every pair we have studied. A country’s political, economic, and social conditions directly and immediately impact the value of a currency. Thus, if you want to trade volatility, organize a proper fundamental analysis to make a better prediction.
Monitor Currency Spreads: The spreads, fees, and commissions for trading high volatile currency pairs are also high. And these can make a noticeable change to your trading profit and can even exaggerate the losses. The spread amount depends on pair to pair, so consider them when choosing a currency pair.
Bottom Line
Trading the most volatile forex pairs can make you earn more profit. However, the associated risks are also high, and not every trader can trade them.
Volatility trading requires an in-depth understanding of the market, a solid plan, robust risk management, and excellent psychology. If you think that you have all these elements, then only go for this strategy.
If not, join Market Investopedia, a leading hub for financial education. Our team can help you gain market understanding and trade volatility