This high dependency on the commodity as an export makes the Canadian dollar vulnerable to fluctuations in the price of oil. While the table above is fairly comprehensive, it is by no means a complete listing of every exotic currency in the world. However, it does cover some of the most popular of the less popular exotics. This naming convention is the same regardless of the currency pair you’re trading. Currency pairs work by comparing the price of one currency to the other one’s. Therefore, they allow you to understand how much both of them are worth.

The name for the currency is the “swissie.” It has gained a lot of popularity worldwide since many people believe it’s a safe haven in times of volatile economy or challenging circumstances. There are numerous Forex pairs for traders to choose from, but experts consider some specific ones to be the major players in the industry. If you’re in the trading world, you’ve probably heard about the ‘major’ pairs.

  • This article reveals 28 major forex pairs list and helps you focus on only the important forex currency pairs.
  • The USD/CHF pair, sometimes called the ‘Swissie’, is another popular major pair.
  • CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
  • We want to clarify that IG International does not have an official Line account at this time.
  • When choosing a currency pair, make sure to analyze its intraday activity.

Conclusion: Understanding and trading the major forex pairs

Support levels alpari review are anticipated at approximately 1.12, with a critical secondary support at the 200-day simple moving average (SMA) of 1.07. In 2024, Japan exported $148.2 billion in goods to the US – mainly automobiles, vehicle parts, and electronics. The US, in return, exported $80.2 billion worth of goods like aircraft, machinery, and semiconductors to Japan.

It depends on what you’re looking for, but overall, good pairs are the ones that look like they’ll have a profitable future. However, many cross-currencies are still popular, such as the GBP/EUR, the EUR/CHF, and the EUR/JPY. Some of the most famous commodity currencies are the AUD/USD, the USD/CAD, and the NZD/USD. Also known as the ‘kiwi,’ this currency reflects how many US dollars you need to buy one New Zealand dollar. In 2022, the pound’s value dropped drastically as a result of different new policies that the UK adopted.

This pair is often used as a safe-haven currency during times of market volatility. Forex isn’t just a playground for traders; it’s the secret sauce behind global trade. Think of currency pairs like EUR/USD or USD/JPY as the bridge that connects economies. They make international transactions quick and easy, letting businesses trade across borders without a hitch. Unlike stocks, which focus on individual companies, currency prices reflect an entire country’s economic health.

  • These pairs are popular not just because they’re traded often, but because they tend to be more liquid and have tighter spreads than the rest.
  • This liquidity generally leads to tighter spreads (lower costs) and less price volatility, which can benefit retail traders by providing more predictable movements.
  • Given China’s position as Australia’s predominant trading partner, Chinese economic conditions significantly influence AUD trajectories.
  • The next lower tier of liquidity is shared by the minor currency pairs, which include the so-called cross currency exchange rates that do not involve the U.S.

b. USD/CAD

Such currency pairs are the basic units in FX trading and are critical elements that investors must analyze to pursue profit. However, unlike some major pairs with relatively stable price movements, GBP/USD frequently experiences sharp spikes and reversals. These swings are driven by economic announcements from the UK, such as inflation reports or employment data, as well as political developments like Brexit or Scottish independence discussions. On the US side, Federal Reserve policies and broader global sentiment play a critical role in impacting the major currency pair.

Market pricing currently reflects a 97% probability of a Reserve Bank of Australia (RBA) rate reduction at its 20 May meeting. Traders anticipate four to five 25-basis-point (bp) cuts by year-end, potentially bringing cash rates below 3%. Should the RBA adopt a more measured approach to monetary easing, this would provide additional support for the Australian dollar. Apprehension regarding US economic resilience continues to intensify, evidenced by deteriorating employment statistics and consumer confidence metrics.

Such traders will probably want to confine their trading activities to highly liquid top traded currency pairs like EUR/USD and USD/JPY. These popular forex pairs feature the tightest dealing spreads and their markets can handle very large amounts due to the significant number of well capitalized market makers and other participants. In the forex market, the term ‘major pairs’ refers to the most traded currency pairs, all of which involve the US dollar (USD) paired with another major global currency.

Exotic currency pairs

Major pairs tend to move more predictably compared to less liquid or exotic pairs. This stability makes it easier for traders to identify trends and apply technical analysis effectively, reducing the guesswork involved in trading. Despite its safe-haven reputation, USD/CHF can occasionally exhibit sharp, unexpected price moves due to interventions by the Swiss National Bank (SNB). Traders must stay vigilant when trading this major currency pair, as the SNB has historically acted to curb excessive franc strength. The GBP/USD forex pair is known for its unpredictable behavior and is often referred to as “Cable” due to its historic trading connection between London and New York via transatlantic cables.

How many major currency pairs are there in forex trading?

For these reasons, EUR/USD accounts for a significant share of daily forex transactions and is a favorite among traders. Representing 20 European countries, this makes the euro the second most-traded currency worldwide. The euro’s value is shaped by the European Central Bank (ECB), economic conditions within the eurozone, and various political factors. Highly liquid and influential, the euro’s primary trading pair is EUR/USD, one of the most active pairs, serving as a key measure of euro strength against the dollar. In this article, we will delve into the characteristics of major currency pairs that FX traders should know, and how to approach trading strategies tailored to each currency pair. Understanding the characteristics of currency pairs will enable both beginners and advanced traders to make more effective trading decisions and will also be helpful in risk management.

This ensures tight spreads, fast order execution, and relatively stable price movements, making it a top choice for traders at all levels. The EUR/USD often shows trends that are easier to analyze compared to less liquid pairs, which is why it’s commonly used in strategies like trend-following and range trading. Some traders prefer to focus on major currency pairs, such as EUR/USD, USD/JPY, or GBP/USD, because they are typically more liquid and have tighter bid-ask spreads than other pairs. Exotic currency pairs tend to have lower liquidity and trading volume, wider bid-ask spreads, and higher transaction costs compared to major and minor currency pairs. For example, the EUR/USD forex pair represents the Euro and US dollar exchange rate. Forex traders buy and sell these pairs to profit from exchange rate changes.

For example, during the early months of the COVID-19 pandemic, currencies like the Australian dollar and Canadian dollar dropped sharply due to uncertainty and economic disruption. Such events disrupt trade, hurt investor confidence, and weaken currencies tied to the affected economies. The USD/CHF major forex pair is often called a “safe-haven pair,” as the Swiss franc (CHF) is viewed as a stable store of value during times of high volatility. Switzerland’s reputation for political neutrality and a robust financial system supports this status, leading to demand for the franc in uncertain times. Others may prefer to trade exotic pairs, such as USD/BRL or USD/TRY, which can offer higher potential returns and carry higher risks.

Also, the Pound Sterling is usually called the “Quid” by dealers, which is a plural term, while the Swiss Franc is known as the “Swiss”, which is also plural. Ultimately, the best forex pair to trade Bitfinex Review will depend on your trading style and preferences. Whether you’re a beginner or an experienced trader, this ebook is a valuable resource to have on hand.

The daily average turnover for the NZD underscores its importance in the forex market as a bridge currency for trade and investment in this region. It’s often seen as a ‘safe haven’ currency, attracting traders in times of global uncertainty. The Swiss National Bank (SNB) closely manages the franc’s valuation to prevent excessive appreciation. CHF’s reputation as a safe-haven asset, alongside Switzerland’s stable economy and low inflation, make it unique. The USD/JPY pair represents the exchange rate between the US dollar and the Japanese yen. The Japanese yen is the currency of Japan, which is one of the world’s largest economies.

It involves buying and selling currencies, with the aim of profiting from fluctuations in exchange rates. Forex traders often focus on a particular set of currencies known as the major pairs. In this article, we will explain what the forex major pairs are and why they are important. The major pairs in forex are the most actively traded currency pairs in the forex market.

Market sentiment, driven by traders’ risk appetite, influences currency demand. In risk-on environments, currencies like AUD and NZD strengthen, while in risk-off situations, safe-haven currencies like USD and JPY gain traction. Speculative trading further drives short-term volatility in major forex pairs.

The Japanese yen, a safe-haven currency, tends to strengthen during periods of market uncertainty and weaken when hitbtc crypto exchange review global risk increases. In contrast, professional Interbank traders will typically deal directly with other professional forex market counterparties at banks and other financial institutions. Furthermore, each currency pair consists of a base currency that appears before the slash and a counter currency or quote currency that appears after the slash in the common market shorthand. You may even want to take note of forex pairs that correlate as this could also give you an added benefit. The exotic pairs tend to have the widest spreads, thinnest liquidities but can be the least volatile compared to the others. The USD/CHF is a safe haven currency which is where investors will put their money when the markets are extremely volatile and uncertain.