The Best Forex Currency Pairs to Trade (2024)

Major currency pairs are usually found in forex trading, and it involvesbuying and selling of currencies. They are typically done in pairs, and each currency is defined by its ISO currency code. For example, US dollars is USD, Canadian dollars is CAD, and so on. This article will help you understand more about currency pairs, how they work, what affects their prices, and more.

Currency pairs involve two currencies, whereby one is a quotation of the other. In short, one currency is compared to another currency. The first currency is usually known as the base currency, and the second one is the quote currency. If, for instance, you pick EUR/USD. The EUR is the base currency, and the USD is the quote currency.

So, if the quote for EUR against USD is 1.13, it means that 1 EUR can be changed for 1.13 USD. The rates of every currency are usually not constant. They keep changing. The EUR can appreciate while the USD depreciates or vice versa.

The major currency pairs take up to 75% of the entire forex trades, but you should note that not all currencies have thesame liquidity. The liquid ones are easier to trade than those that are not majorly used because they have the majority of buyers and sellers.

Also, know that any currency without the USD is known as the cross pair. They may include; EUR/GBP, EUR/CHF or EUR/JPY.

There are seven major currency pairs traded globally, and all have nicknames. Traders choose them depending on their trades in the forex market. But generally, four currency pairs are never missed out. This is because they are traded in huge volumes and represent the world’s biggest economies. They include:

EUR/USD: The Euro and US dollar

The EUR/USD currency pair has a positive correlation with the GBP/USD and a negative correlation with the USD/CHF. The euro, the British pound, and the Swiss franc all have a positive correlation.

USD/JPY: The US dollar and Japanese Yen

The USD/JPY has generally been the second most commonly traded pair. Political tensions between the United States and the Far East have been a source of concern for this pair. Because the US dollar is the base currency in all three pairings, the pair tends to be favourably connected with USD/CHF and USD/CAD.

GBP/USD: The British pound sterling and US dollar

The GBP/USD pair has a positive connection with the EUR/USD and a negative correlation with the USD/CHF. This is because the British pound, Swiss franc, and euro all have a positive correlation.

USD/CHF: The US dollar and Swiss Franc

USD / CHF is the currency pair made up of US dollars and Swiss francs. The currency pair shows how many Swiss francs (the quote currency) it takes to buy one US dollar (the base currency). Trading the USD / CHF currency pair is also known as “Swissie” trading.

AUD/CAD: The Australian dollar and Canadian dollar

The AUD / USD currency pair tends to have a negative correlation with the USD / CAD, USD / CHF, and USD / JPY pairs, as the US dollar is the quoted currency in these cases. The correlation with USD / CAD is also due to the fact that both the Canadian and Australian dollars have a positive correlation with each other, as they are both commodity block currencies.

NZD/USD: The New Zealand dollar and US dollar

NZD / USD. The value of the NZD / USD pair is reported as 1 NZ dollar for every X US dollar. For example, if the pair is trading at 1.50, it means that $ 1.50 would be needed to buy NZ $ 1.

USD/CAD: The US dollar and Canadian dollar

Because the US dollar is the quote currency in these other pairs, the USD/CAD currency pair has a negative correlation with the AUD/USD, GBP/USD, and EUR/USD currency pairs.

Traders always follow the market to know which major currency pairs they should pick. This is because the prices are usually affected by factors such as:

Politics

Corruption, trade wars and elections usually cause instability, which affects the forex market significantly. Politics is a huge factor in forex trading because governments can affect the economy, which may lead to appreciation or depreciation of currency values.

Interest rates

Traders are always looking for higher yields, and that is why financial stability is crucial. They must keep checking whether interest rates are rising in the central banks.

Economic Data

Economic data is another factor, and traders must always follow this to know how a nation performs. Economic data may include inflation, employment data, GDP, etc.

If you are a beginner, choose liquid currency pairs until you know how the pairs move. Also, select the best trading time, leverage, and follow the news to understand how the currencies are affected.

When you trade with major currency pairs, we recommend you to:

• Develop your trading abilities and skills .
• Define your objectives and trading style.
• Chose a good Trading Platform and a good Broker
• Choose a Methodology That Is Consistent and stick to it.
• Determine the points of entry and exit and respect them.
• Calculate Your Probability and have proper risk management
• Always take Small Losses and make sure to understand why you lost.
• Conduct a weekend analysis and prepare for your week.
• Maintain a Paper Record and Journal

A pip is the last decimal place to which a certain currency rate is commonly quoted (percentage in point). In normal market conditions, several online forex providers often quote no more than a set 1-point spread between the bid and offer on major currency pairs and liquid cross rates.

Currency traders frequently seek out currency pairs with the greatest pip values, as they are particularly effective for short-term techniques like day trading. Each pip’s value is determined by your lot size and the currency you’re dealing. Pips can also be used to calculate how much leverage a trader can employ when trading foreign currencies.

Each of the four traditional main currencies is profiled here, along with the factors that influence their price changes. It’s important to note that the most popular currency pairs by trading volume aren’t necessarily classified as majors. The four majors, on the other hand, are the market’s most traditionally popular currency pairs. For example, the AUD/USD currency pair is currently the fourth most traded in the world, but it is not one of the four traditional majors.

The euro and US dollar: EUR/USD
The US dollar and Japanese yen: USD/JPY
The British pound sterling and US dollar: GBP/USD
The US dollar and Swiss franc: USD/CHF

The term “cross currency pairs” refers to currency pairs that do not include the US dollar. These pairs aren’t included in some traders’ collections of major currencies. However, for the sake of this post, we will look at some of the cross currencies that are occasionally classified as majors. The following are some examples of popular cross currency pairs:

GBP/EUR
EUR/CHF
EUR/JPY