Major Currency Pairs
A currency pair is a quotation in two currencies. It is the amount you ‘d pay in one currency for another. Major currency pairs are among the most prevalent currency variations on the forex market. Opinions vary over the list of the majors, but most will include the conventional four major currencies–USD / CHF, GBP / USD, USD / JPY and EUR / USD–as well as the 3 commodity currencies that are most traded against the US dollar, NZD / USD, USD / CAD, and AUD / USD.
While these seven major pairs are included in most lists, some traders would also add important currency pairings that do not include the US dollar–often called cross currencies –in their major currency list. The most commonly exchanged pairs are EUR / JPY, EUR / CHF, GBP / EUR.
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Understanding Major Currency Pairs
Major currency pairs are based on a list of popular currencies in pairs with the dollar. The main currency basket consists of only 7 pairs— USD / CHF, GBP / USD, USD / JPY, EUR / USD, NZD / USD, USD / CAD, and AUD / USD. These currency pairs make up the bulk of Forex market turnover. For example, the EUR / USD pair alone accounts for around 30 per cent of the volume of trading. Also included in the list of major currencies are key currency pairings that do not include the US dollar at all such as EUR / JPY, EUR / CHF, and GBP / EUR often referred to as cross-currencies.
In order to effectively trade the major forex pairs, you need to find out which forex pair you would like to trade, analyze the forex pair, both technological and fundamental, choose a forex trading strategy, and verify that you are happy with your risk exposure.
The key factors influencing major currency pairs are the central bank, economic data, policy changes in overnight interest rates, and volatility
What Are the Best Currency Pairs to Trade ?
The euro and the US dollar are undeniably a trading classic, the most famous and popular pair of currencies. This pair does the greatest amounts of trading, and that is an advantage, of course, as it affects the spread. The pair is also amongst the most unstable, as intraday movements can reach 100 pips.
This currency pair holds a decent place among seasoned and inexperienced favourites. Like the previous pair, during the European session GBP / USD is the most traded. It’s a very tempting pair for those traders who like technical analysis. However, be prepared also for the fact that the pair makes broad up and down motions at the start of the London session, due to which false breakouts occur. Trade becomes easier as the market becomes more stable.
The US dollar and the Japanese yen duet are very attractive, albeit a little whimsical. The US dollar is the world’s major currency, and the yen is the Asian region’s main currency. The pair is noteworthy because it follows without major reversals if it comes into the pattern. Some delays occur, and then graphic figures like “post” or “pennant” are visible on the screen. And that means that graphical analysis is very useful to you while trading with this asset.
The Australian / American pair is quite stable relative to other members of our ranking, its variability is around 60 pips during the day. It renders resistance-and support-based methods, as well as Fibonacci phases. The pair reacts to the news from the USA as well as to the data on the Australian commodity market as regards the fundamental data.
The US dollar and Swiss franc are among the most common currencies as well. The pair is more open to U.S. fundamental data, and less sensitive to Swiss news, possibly because in this country the economy is more stable. European and American sessions are the most active trading hours, during which the volatility may be 60-70 pips. For this pair, Monday is the quietest trading day, and the busiest is Friday.