A guide to the world’s most actively traded currency pairs

When you invest in the foreign exchange (forex) market, you’ll have access to some of the world’s largest and most actively traded currencies. These currencies are traded in pairs — known as currency pairs — since the two currencies are compared directly against one another to determine their value. When trading, you’ll be attempting to profit from price movements, which occur because the market is volatile and can be influenced by a range of external factors. This means that you’ll need to keep up to date with the news and key events in the economic calendar to plan ahead for periods of increased volatility. By going online to find out how to learn more about what forex trading is, you can increase your chances of making gains on your position and avoid incurring significant losses. Here is a guide to the world’s most actively traded currency pairs .

A guide to the world’s most actively traded currency pairs

A guide to the world’s most actively traded currency pairs

The dollar is the world’s reserve currency and because of this, it appears in eight of the most actively traded currency pairs. In this article, we will take a look at some of the most influential pairs, to give you an insight into the currencies that can move the market significantly.

Keep reading to find out more.

EUR/USD

The Euro against the US dollar is the most widely-traded forex pair in the market, since Europe and the US are two of the world’s largest economies. The EUR/USD is highly liquid and it is because of this that this currency pair is so popular among traders, since it tends to be less volatile than other pairs. It is important to note, however, that highly liquid instruments can experience periods of high volatility during unprecedented events, for example.

USD/JPY

The second most popular currency pair is the US dollar against the Japanese yen. In contrast to the EUR/USD, this pair is extremely liquid, but remains an attractive trading prospect because it can fair extremely well during periods of worldwide economic uncertainty. When trading this pair, you will need to keep up to date with economic and political events in China and Korea, since these can have a significant effect upon the value of the JPY.

GBP/USD

The Great British pound against the US dollar is another highly influential currency pair and these countries share strong trading relations. At the time of writing, both economies are currently experiencing high levels of inflation, recovering from the effects of the coronavirus pandemic. The UK have already responded by increasing their interest rates, with the Federal Reserve expected to follow suit in March. Since increased interest rates can drive forex prices, this pair could prove volatile in the coming months.

USD/CAD

The US dollar against the Canadian dollar is a highly liquid pair. This is because the Canadian dollar has strong connections to the commodities market, since the nation is a major exporter of oil, grains and minerals, so trade flows increase its liquidity. Like most pairs, the USD/CAD can be volatile and you’ll need to undertake fundamental and technical analysis to plan ahead for periods of volatility.

AUD/USD

Once the world’s third most popular currency pair, the Australian dollar against the US dollar remains one of the most actively traded pairs due to its strong liquidity. This is due to the fact that the AUD, like the CAD, is a large exporter of natural resources, like gas, coal and agricultural products.

If you’re considering opening a position in the forex market, there are many things that you’ll need to take into consideration when choosing a currency pair to invest in. Firstly, since the market is open for trade 24 hours per day, you’ll want to factor in a country’s time zones since there will be specific periods of the day at which certain pairs are more active than others. In addition to this, you’ll need to take a look at the economic health of the major nations and decide which pair is currently outperforming others in the market, providing you with a lucrative entry point.