Thread: Top 10 Forex Pairs to Trade and NEVER Trade!

What are the most traded forex pairs in the world? Knowing the top 10 forex pairs to trade is vital in helping you to make profitable moves. Also, what Forex major pairs should newbies and experts trade?

Forex is the only market that never closes during the working week, the only exclusion is the Crypto Exchanges which are open all year long. The Forex market stays open from 5 pm EST on Sunday to 4 pm EST on Friday every week and it is open for 24 hours a day during trading days.

When you trade Forex, you trade with currency pairs from two different countries.

List of Top 10 Forex Pairs to Trade
Not all currencies are worth trading. That being the case, let’s take a look at our list of top 10 Forex pairs to trade.

1. EURUSD

EURUSD is the most traded currency pair of the Forex market. Over 24.0% of the daily Forex volume derives from EURUSD trades. This pair is very popular among the traders since it connects the world’s two biggest economies:

Euro representing the European economy;
USD representing the US economy.
Since EURUSD volume and demand is high, the spread for this pair is often very low. Traders enjoy a smaller charge with sufficient liquidity and tight spreads.

Several fundamental factors determine the EURUSD exchange rate. Here is the list of the most important fundamental events for EURUSD traders:

• The interest rates set by the European Central Bank;
• US Federal Reserve interest rate announcements;
• NFP figures announcements;

The currency with a higher interest rate often creates a higher demand. But nowadays almost all of the central banks are rallying towards negative interest rates. The US FED so far is the only exception. As a result, USD has been strengthening in the recent past.

2. GBPUSD

Brexit has shaken the GBPUSD market significantly. However, this pair is still the second most popular currency pair in the world.

Why is GBPUSD called cable?

Often you will find traders calling GBPUSD as ‘cable’. The term “Cable” comes from telegraph days. Before the introduction of the Euro, GBPUSD was the most traded currency pair. Back then traders would telegraph the bid and ask quotes between London and New York. Since then trades call GBPUSD as “cable”.

In 2019, this pair made up more than 9% of the total daily Forex transactions.

Like other currency pairs, the strength of GBPUSD comes from the strength of the British and American economies. If the British economy grows faster than America, it is likely that the pound will be stronger against the Dollar. However, any better results from the American economy may reverse the scenario. Since the Brexit uncertainty has shaken the British economy, GBP has depreciated against the USD in the past couple of years.

Just like EURUSD, GBPUSD is affected by interest rate announcements from the Bank of England (BoE) and the FED. The subsequent difference between the interest rates on the Pound and the Dollar can have a great impact on the price of the GBPUSD pair. At the moment Brexit updates also have a significant effect on GBPUSD volatility too.

3. USDJPY

USDJPY pair is also known as ‘the gopher’. USDJPY is one of the most-traded Forex pairs on the market, which represents approximately 13% of all daily Forex transactions in 2019.

Did you know? Japanese rice traders were the first people to use candlesticks.

Like EURUSD, traders also like USDJPY due to its strong liquidity. Japanese yen is the most traded currency in Asia and the US dollar is the most common currency in the world. Thus, the USDJPY spread is often the lowest in the Forex market.

The Fed, BOE, and ECB, the Bank of Japan set the interest rates for the Japanese economy are the main fundamental market drivers.

Top 10 Forex pairs to trade
USDJPY often has a negative correlation with EURUSD and GBPJPY.

4. AUDUSD

Traders often call AUDUSD ‘Aussie’. This pair represents the Australian dollar against the US dollar. In 2018 AUDUSD volume was 5% of the global Forex volumes. Since Australia is an export country, AUD as a currency fluctuates with the commodities, such as iron ore and coal.

Falling commodity prices will often put AUD under pressure. Therefore, AUDUSD falls into the commodity currencies category too.

Like previously mentioned currency pairs, the AUDUSD exchange rate is also affected by the interest rate decisions between the Reserve Bank of Australia (RBA) and the FED. If American interest rates are low, USD will weaken against AUD, and the AUDUSD price may go up.

5. USDCAD

USDCAD is another commodity currency. Traders often call USDCAD the ‘loonie’ on account of the loon bird that appears on Canadian dollar coins.

The USDCAD transactions make approximately 4% of the daily Forex trades. Canada is a major Crude Oil exporter. Hence, the strength of the USDCAD pair links to the price of oil.

Since oil is priced in US dollars, Canada can earn a large supply of US dollars through its crude oil exports. As such, with the increase of oil prices, the Canadian dollar will strengthen against the US dollar.

In a general rule, the US dollar weakens when the price of oil increases. Therefore, if the dollar weakens, more US dollars will convert into other currencies to buy the same amount of oil. However, expensive oil means that the Canadian dollar may strengthen due to the close ties between the Oil price and the Canadian dollar. Moreover, traders should keep an eye on both Brent crude and US crude when trading USDCAD currency pairs.

6. USDCHF

USDCHF is the 6th most popular forex pair on our list. CHF stands for Swiss Franc, the national currency of Switzerland. This pair is popular for the Swiss financial system, which is a safe haven for investors and traders.

The Swiss franc is a safe haven asset. Therefore, the Swiss franc will see less interest from traders in case of any global financial crisis. With the increase of volatility, the price of this pair would drop as CHF strengthens after experiencing increased investment. USDCHF accounts for approximately 3% of the global Forex transactions.

7. EURGBP
EURGBP is the first Minor Forex Currency pair that makes it to our list of top 10 most traded forex pairs. Many traders will often lose money trading EURUSD. This is because of the historic link given in the proximity of the UK to Europe.

Despite the difficulties in EURGBP technical analysis, this pair makes 2% of the global Forex transactions every year. Like the other currency pairs, traders should keep their eyes on any ECB and BoE announcements which would increase volatility further.

In recent years, the fluctuation in this currency pair has become unpredictable due to the uncertainty surrounding BREXIT. However, the high level of volatility may attract traders, but it has an adverse impact on a risk management strategy.

8. AUDJPY
AUDJPY is another forex pair that has made it to our top 10 list. This cross pair has its main volatility during the Asian session.

Japan is an export-based economy, while Australia is a commodity-based economy. Global uncertainty and any volatility in the commodities put an impact on the AUDJPY pair. Like other currencies, any interest rate decisions from RBA or BOJ put an impact on the AUDJPY price.

AUDJPY is a hard Forex pair to trade, however, once you master your trading strategy, you will find synergies.

9. NZDUSD
Many traders love NZDUSD. Statistically, NZDUSD is the most trader-friendly currency pair.

The economy of New Zealand mostly depends on dairy products. Therefore, the NZDUSD price moves with the price change in the global dairy industry. Price rise in the dairy industry will bring bullish sentiment to the NZDUSD price. On the other hand, a decrease in Dairy products price sets bearish sentiment.

10. GBPJPY
In 2018 GBPJPY was the most predictable currency pair according to the AtoZMarkets trader survey.

This pair is one of the most volatile Forex pairs. Almost any global news will move the GBPJPY price. Many long-term traders favor this pair as it moves with long legs with lots of pips. However, small traders with small investments may struggle to make a profit from this pair. This pair is also one of the best scalper-friendly minor forex currency pairs too.

Conclusion
Trading any of these top 10 forex pairs carries the opportunity to make a healthy profit, but it requires patience and regular research. Remember that in order to succeed in forex trading, you have to invest in proper forex education. Also, having a reliable forex broker and a like-minded network is also crucial. You should only trade with brokers that you trust, and trade live after you test your strategy with demo accounts.

For more such informative and insightful articles, you can have a look at AtoZ Markets.