Most Traded Currency Pairs

Your profit in the forex market is affected by many factors. One of the most important factors is the currency pair in which you are trading. In order to help you in choosing the right currency pair, we have prepared a list of the most traded currency pairs that dominate the world. 
Most traded currency pairs

Introduction

Currency is a form of money issued by the central banks or the government. It is a common medium citizens use to buy goods and services within the nation.

You can buy anything in your country with your nation’s currency. However, you cannot buy foreign products or services with your nation’s currency.

In such cases, you will exchange one currency for another. Suppose you want to import a Mercedes from Japan to the USA. In this case, you can exchange your national currency with Japanese Yen. And then, you can make a payment to the Japanese company. 

In this case, you exchanged JPY (Japanese Yen) with USD (US Dollars) to purchase Mercedes. So, JPY and USD is a currency pair.

The value of each currency differs based on their economic status and financial health. Like stocks, gold people also trade in currencies and invest their money in strong currencies. 

A quick glance

A currency pair is a group of two currencies that represent the value of one currency with respect to another currency.

USD/JPY, CAD/EUR, and GBP/CNY are examples of currency pairs. The first two letters of the currency code represent the country, and the last letter represents the currency.

USD/JPY, CAD/USD, GBP/USD, and USD/EUR are the example of major pairs. 

  • GBP/AUD, EUR/JPY, CAD/NZD, etc., are examples of minor pairs. USD/INR, CAD/RUB, TRY/GBP, etc., are exotic pairs. 

EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, NZD/USD, USD/CAD, EUR/JPY, EUR/GBP, and AUD/JPY are examples of top traded currency pairs. 

What is currency pair?

The currency exchange always takes place in pairs. In simple words, to buy one currency, you have to sell another. And the currencies which you buy and sell make a currency pair.

A currency pair is a group of two currencies that represent the value of one currency with respect to another currency.

Currencies are traded in pairs in the FX market. A currency pair consists of two currencies first is the base currency, and the second is the quote currency.

Most traded currency pair

Currency pairs Examples

USD/JPY, CAD/EUR, and GBP/CNY are examples of currency pairs. The first two letters of the currency code represent the country, and the last letter represents the currency.

In USD/JPY, USD represent United States Dollars, JPY represent Japanese Yen. Here the base currency is USD, and JPY is the quote currency.

Suppose there is a trader trading in USD/JPY; if he believes the value of USD will rise against JPY, he will buy the pair, and if not, he will sell it. 

In this case, if the trader makes the right prediction, he makes money; if not, then he loses money. 

Types of Currency Pairs

Major currency pairs:  Forex Major Pairs consist of US Dollars and one another currency from 7 major currencies such Japanese Yen, Britain’s Pound, etc. 

These are the most traded currency pairs in the world with great liquidity. USD/JPY, CAD/USD, GBP/USD, and USD/EUR are the example of major pairs. 

Minor currency pairs: Minor pair consists of two major and top traded currencies other than USD.

Simply put, the pair of any of the two major currencies, excluding USD, is a minor pair. GBP/AUD, EUR/JPY, CAD/NZD, etc., are examples of minor pairs.

Exotic currency pairs: These are the group of one major currency with the currency of emerging and developing nations. Such as USD/INR, CAD/RUB, TRY/GBP, etc.

Importance of currency pair in Forex Trading

The type of currency pair plays a crucial role in forex trading. There are more than 170 legal currencies, and many traders invest their money in them. 

In forex trading, the more the competition more the chances of profit. So investing in strong currencies such as USD and EUR results in high profit. 

The countries are economically sound, with the best infrastructure technologies and great resources. So obviously, investing in these currencies is more profitable.

Meanwhile, investing in weaker and emerging currencies, such as currencies of Asian, and African nations, involves a huge risk. 

Economic uncertainties, poverty, and unemployment negatively affect their currency value.

So, currency trading is affected by many factors, such as liquidity, leverage, spreads and trading volume. Choosing the right currency pair is necessary to succeed as a forex trader.

But not to worry, we have prepared a list of the most volatile currency pairs by studying different market factors to help you select the right currency pair.8520

Top 10 Most traded currency pairs

EUR/USD (Euro/US Dollar): Best for Beginners 

EUR/USD is the most traded currency pair by volume globally and dominates the currency market. European Union and the United States are the strongest economies in the world.

The pair offers the traders tight spreads, high liquidity and volume. As per the report, 30% of the forex transactions occur in EUR/USD. That makes it the best currency pair for beginners to start trading. 

USD/JPY (US Dollar/Japanese Yen): Best for tight spreads 

This pair is also popularly known as Gopher. It is the second most traded pair in the world and offers high liquidity and a tight spread. Japan is the strongest economy in Asia, which is the reason why Yen is heavily traded in Asian countries.

The combination of Yen and USD is quite popular as the US dominates the world and Japan dominates Asia. Trading in this currency pair is affected by many factors, such as the interest rate of the Bank of Japan and ECB. 

GBP/USD (British Pound/US Dollar): Best for Day traders 

This pair is popularly known as the cable. It is the most profitable currency pair for trading in Forex. The pair is one of the most fluctuating; price changes frequently that cause fluctuations in exchange rates.

The pair is best for advanced day traders and scalpers. As it generates high profit, the chances of losing money are also high while trading in this pair. 

USD/CHF (US Dollar/Swiss Franc): Safest Currency to trade 

The pair is popularly known as Swiss. Switzerland’s financial system is already very famous amongst investors globally. Like gold trading, the Swiss franc is also known as a safe haven asset.

While US Dollar dominates the currency market. This combination of safe haven and dominating currency is quite popular and attracts traders all over the world to invest. 

AUD/USD (Australian Dollar/US Dollar): Correlation with commodity market 

The currency combination is popularly known as Aussie. Australia earns a lot from exporting commodities such as metals and minerals globally. Its currency value is highly affected by its export.

So, whenever the prices and export of these commodities increase, the Australian Dollar appreciates, and traders buy the pair and, in the opposite case, sell it. Due to the influence of the commodity market, the pair is amongst the most traded currency pairs. 

NZD/USD (Newzealand Dollar/US Dollar): Correlation with Dairy market 

Newzealand is one of the leading economies due to its agriculture sector. It is the world’s largest producer of milk. These factors make NZD/USD amongst the Forex most traded pairs.

Due to fluctuation in the dairy and commodity market, price fluctuation occurs in the pair. As a result, trading increases in it. The pair is popularly known as Kiwi. 

USD/CAD (US Dollars/ Canadian Dollars): Correlation with oil prices 

Canada is the largest exporter of oil. So its currency has a positive relationship with oil prices. That makes USD/CAD a popular pair in the forex market

Oil export has a major role in the strength of Canadian Dollars. So whenever the oil price rises, traders sell the pair and buy the pair when the price decline. 

EUR/JPY (Euro/Japanese Pounds): Correlation with Stock Market 

The pair is popularly known as Euppy or Yuppy. Euro and Pounds influence the forex market. It is the seventh most traded currency pair. The pair offers low spreads and decent volatility in the market.

The best part about this pair is that it positively correlates with the stock market. When the prices of the stock rise, the trades in the pair rise and vice versa. 

EUR/GBP (Euro/British Pounds): The most difficult currency pair 

European Union and Great Britain are amongst the strongest economic pairs in the world. However, trading in EUR/GBP is quite difficult for traders. 

Their market changes very frequently due to changes in export and imports. Thus it is difficult for traders to make accurate predictions. 

AUD/JPY (Australian Dollar/Japanese Yen): Proxy for Risk appetite 

As we have studied above, the commodity market greatly affects the price of Australian dollars, and Japan is one of the strongest economies. 

So the combination of Australian Dollars and Japanese Yen is amongst the top currency pairs in Forex for traders looking for the right trading opportunity with decent market liquidity and volatility.i]

Conclusion

Forex trading is highly affected by currency pairs. In order to select the right pair, the trader needs to understand the factors that affect their trading.

We have discussed the 10 most traded currency pairs, their features, and factors that cause a change in their trading. Select only one pair to trade, as it will be easy to monitor its market condition.

Consider their factors for selecting currency pairs. For example, if you are interested in oil trading, trade in USD/CAD; if you also trade in the stock market, trade in EUR/JPY. Besides these, consider market volatility, liquidity and risk to selecting top currency pairs in Forex

Also, If you noticed, USD got a place in almost every most-traded pair. The reason is simple it is the strongest currency, and the change in its value affects all financial markets. 

It kind of dominates the forex market. So start trading with a  major currency pair, as it is easy to predict the market change.

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Tony anderson

Tony Anderson is a financial writer with over eight years of experience in the finance world. His keen interest in finance is evident from his education; Tony has done his Bachelor's and Master's in finance from a renowned university. And, is now taking his career ahead in the financial field. Professional Background: Anderson started his professional journey at a leading finance firm. In the first four years of his professional journey, he has worked with leading financial education providers. For the last four years, he has been a part of Market Investopedia's core research team. He has been working in our company as a senior content writer. He has been a great support in our clients' trading journey over the years. Expertise: Anderson has a keen interest in writing for forex, cryptocurrencies, commodities, stocks and other financial domains. He has written financial courses, blogs, and articles for our website. In addition, Anderson also participates in making daily research reports and conducting webinars, seminars, educational videos, market analyses and news sessions for our clients. Key Qualities: Anderson uses his power of words to transform complex financial concepts into simple yet engaging content for our diverse audience. He uses his technical and fundamental knowledge to provide valuable market insights to our clients. His impactful writing and insight are behind our great presence in the market.

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