Trade the most popular forex currency pairs: Top 10 dominating the global market

When it comes to trading in the forex market, choosing the right currency pairs is the key to success. Traders, whether experienced or just starting out, need to understand the characteristics and behaviors of each currency pair. This article will present the 10 most well-known and popular currency pairs in the forex market, along with effective trading methods for each pair.

Basic Knowledge: What is a forex currency pair?

A forex currency pair consists of two currencies, with the base currency (Base Currency) and the quote currency (Quote Currency). For example, in the EUR/USD pair, the euro is the base currency, and the US dollar is the quote currency.

Exchange rates, such as EUR/USD = 1.3045, mean that 1 euro equals 1.3045 US dollars. Movements in these exchange rates are measured in Pips (Percentage in Points), which traders use to evaluate profits and losses.

The exchange rate of forex currency pairs constantly fluctuates due to various factors including:

• Differences in interest rates between countries
• Macroeconomic data (GDP, inflation rate, employment data)
• Political events
• Global market sentiment and conditions

Traders leverage these changes to profit from differences in value. The better they understand these factors, the more effective their trading decisions will be.

Comparison table of the 10 most traded forex pairs worldwide

Analysis of each forex pair

1. EUR/USD: The Queen of the Forex Market

EUR/USD, the Euro-US Dollar pair, is the most traded and most watched currency pair. It reflects the economic stature and trade relations between the two largest economic centers in the world.

Main factors driving EUR/USD:

• Interest rate policies of the ECB (European Central Bank) and the Fed (Federal Reserve)
• GDP and inflation data
• Geopolitical events such as Brexit or economic crises

Specific info:

• Very high liquidity, narrow spreads, suitable for traders of all levels
• Best trading hours: overlapping session between London and New York (08:00 - 16:00 GMT)
• Daily volatility: 70-90 Pips
• Suitable for: Beginners and professional traders

2. USD/JPY: The Indicator of the Asian Market

The US dollar versus the Japanese yen reflects the interaction between the two largest economies in Asia and America. It serves as a benchmark for risk in the Asian markets.

Drivers of change:

• US and Japan interest rate policies
• GDP and inflation data of both countries
• Volatility from BoJ policy decisions

Specific info:

• Moderate volatility, high instability during political events
• Best trading hours: Asian session (23:00 - 03:00 GMT) and overlapping London-New York
• Daily volatility: 50-70 Pips
• Suitable for: Intermediate to advanced traders interested in geopolitics

3. GBP/USD: The “Cable” in Turmoil

The British Pound against the US dollar is known for high volatility and profit opportunities.

Key influencing factors:

• BoE and Fed interest rate decisions
• UK economic data
• Political events like Brexit or government policy changes

Specific info:

• Higher volatility than EUR/USD, ideal for short-term trading
• Best trading hours: 08:00 - 16:00 GMT (London-New York overlap)
• Daily volatility: 90-110 Pips
• Suitable for: Mid to high-level traders who enjoy risk

4. USD/CHF: The Safe Haven

The US dollar against the Swiss franc is often considered a safe haven during market uncertainty due to Switzerland’s political stability and strong financial sector.

Factors affecting USD/CHF:

• Swiss National Bank (SNB) (Swiss Central Bank) and Fed monetary policies
• Economic data from both countries
• Global risk sentiment; CHF tends to strengthen during crises

Specific info:

• Lower volatility than other pairs, suitable for conservative traders
• Best trading hours: 07:00 - 16:00 GMT (European session)
• Daily volatility: 50-70 Pips
• Suitable for: Traders seeking stability and hedging

5. AUD/USD: Commodity Indicator

The Australian dollar against the US dollar (“Aussie”) is closely linked to global commodity prices, especially gold and iron ore.

Drivers:

• Commodity prices (Gold, Copper)
• Australian economic data
• China trade status (Major importer of Australian goods)
• RBA policy (Reserve Bank of Australia)

Specific info:

• Moderate to high volatility, trend trading favored
• Best trading hours: Asian session (00:00 - 04:00 GMT)
• Daily volatility: 60-80 Pips
• Suitable for: Commodity-focused traders

6. USD/CAD: Oil Price Indicator

The US dollar against the Canadian dollar (“Loonie”) is strongly correlated with crude oil prices, as Canada is a major oil exporter.

Influencing factors:

• Crude oil prices (WTI and Brent)
• Canadian and US economic data
• BoC and Fed interest policies
• Trade relations and geopolitical events

Specific info:

• Moderate volatility, clear oil correlation
• Best trading hours: New York session (12:00 - 20:00 GMT)
• Daily volatility: 60-80 Pips
• Suitable for: Traders interested in oil dynamics and North American economy

7. EUR/GBP: The European Duel

Euro against the British Pound reflects the relationship between the Eurozone (19 countries) and the UK. It is widely traded in European markets.

Main factors:

• ECB and BoE policies
• Economic data from Europe and the UK
• Trade relations
• Political events like Brexit

Specific info:

• Lower volatility than GBP/USD but still active movements
• Best trading hours: 07:00 - 16:00 GMT (London session)
• Daily volatility: 40-60 Pips
• Suitable for: European market enthusiasts

8. USD/CNY: Global Power Dynamics

US dollar against the Chinese Yuan reflects the economic relationship between the two largest economies. It is closely watched due to its global significance.

Drivers:

• PBoC policy (People’s Bank of China)
• Chinese economic data (GDP, employment)
• Trade balance
• US-China trade tensions and geopolitics

Specific info:

• Strictly controlled by PBoC; volatility follows government signals
• Best trading hours: Asian session (01:00 - 09:00 GMT)
• Daily volatility: 50-70 Pips (excluding crisis situations)
• Suitable for: Traders understanding Chinese policies and macro dynamics

9. NZD/USD: The All-Rounder

The New Zealand dollar against the US dollar (“Kiwi”) is influenced by global dairy and agricultural product prices, as New Zealand is a major exporter.

Key factors:

• Global dairy prices
• New Zealand economic data
• RBNZ policy (Reserve Bank of New Zealand)
• Global risk sentiment

Specific info:

• High volatility, suitable for trend and range trading
• Best trading hours: Asian session (00:00 - 04:00 GMT) and overlapping with New York
• Daily volatility: 50-70 Pips
• Suitable for: Traders interested in Pacific markets and commodities

10. USD/HKD: Stable Currency Peg

The US dollar against the Hong Kong dollar differs from other pairs because the HKD is pegged to the USD by the HKMA (Hong Kong Monetary Authority).

Special features:

• Currency is pegged within a narrow range, resulting in low volatility
• US interest rates influence the forward contracts
• Hong Kong economic data

Specific info:

• Very low volatility, ideal for Carry Trade
• Best trading hours: Asian session (01:00 - 08:00 GMT)
• Daily volatility: 10-30 Pips
• Suitable for: Carry Trade traders and those seeking stability

Summary: Choose your forex pairs according to your style

The forex market has many currencies, but the 10 pairs mentioned above dominate most of the global trading volume. Success in trading depends on selecting currency pairs that match your trading style.

Beginners should focus on highly liquid pairs with narrow spreads, such as EUR/USD. Traders who prefer volatility might be interested in GBP/USD or AUD/USD. Those seeking safety may look at USD/CHF or USD/HKD.

Since forex prices change based on economic and political factors, keeping track of news and economic data is essential for making informed trading decisions and reducing risks.