You are probably aware of the most popular currency pairs, such as EUR/USD, GBP/USD and USD/JPY. But what about other currency pairs? Do they also have a high volume of trading? Here is a curated list of currency pairs that are most commonly traded.
The euro is the most exchanged currency in the world. And it’s also the most liquid, meaning you can buy or sell an asset without impacting its price. The EUR/USD is the most popular currency pair among traders and investors to trade forex because it’s heavily traded and has low transaction costs compared to other pairs, such as GBP/USD or USD/CAD. The recent achievement of parity between the two currencies has got many eyes rolling for its future.
The GBP/USD pair is another popular currency pair worldwide, with liquidity and volume that dwarfs other mixtures. This indicates that there are more buyers than sellers, which makes it easier to buy or sell at a fair price.
The reason for this popularity is not surprising. The GBP/USD crosses both significant economies (the United States and Great Britain). As such, it’s ideal for speculators who want to make bets on either side of these two countries’ monetary policy decisions. Due to its global nature, it’s also popular with corporates, central banks and pension funds looking for an easy way to hedge against fluctuations in exchange rates. Finally, retail investors like trading on this pair because it offers some of the highest returns possible, and there’s always something exciting happening.
Trading the USD/JPY pair is a popular forex strategy. This pair measures the strength of the USD against JPY. Both the nations of the U.S.A and Japan are members of the P5, and their currencies are naturally the strongest of the lot. These are also the top traded currencies worldwide.
The USD/CHF currency pair is one of the world’s most liquid and traded currency pairs. As a result, it has a very high volume of daily trading activity. The U.S. dollar and Swiss franc are major currencies used for international trading purposes. In fact, they’re two of the ten most used currencies in the world today. Because of this, many traders like to trade this combination because there’s plenty of liquidity available on any given day (i.e., there are enough buyers and sellers at all times).
There’s also some economic reasoning behind why this particular currency pairing is so popular. Both Switzerland and America have strong economies with stable banking systems. They both use central banks that regulate their respective currencies. Thus making it easier for traders who want to hedge against risk caused by changes in interest rates (which can happen when inflation rises, as is the current case).
The AUD/USD is one of the most favoured currency pairs to trade forex. It’s an excellent choice for new traders who want to start with a major pair.
The Australian dollar is one of three significant currencies used internationally. The AUD/USD is considered a major currency pair because it represents two economies, each among the top 20 global economies by GDP size.
These are some of the most liquid and popular currency pairs. They can be relatively easier to analyse and trade, and ample news is available for speculation.
Knowing how different markets react to news events and other factors that may affect their prices is essential. Knowing what makes each pair unique will help you decide which one is right for your strategy.