You can’t start Forex trading without a clear plan for which currency pairs to use. You must know about the most traded currency pairs. Because it directly affects your success, risk levels, and returns.
If you go for random pairs, it will lead to higher risks, lower profits, and wasted efforts.
Each currency pair has specific characteristics in volatility, liquidity, and response to market events. Major currency pairs like EUR/USD and USD/JPY make up over 70% of daily Forex volume, according to the Bank for International Settlements. This isn’t by chance. These currency pairs attract traders because they provide high liquidity and more predictable movement.
You can think of currency pairs as your foundation in trading. EUR/USD alone accounts for roughly 30% of Forex trades, which reflects its stability and tight spreads.
Now, if you align your trades with well-chosen pairs, you can set yourself up for better consistency and returns. Yes. You need a strategic approach to currency pairs backed by data and insight, not random guesses.
What Makes a Currency Pair “Most Traded”?
A “most traded” currency pair earns its title through high trading volume, liquidity, and investor interest. The pairs with the highest trading volumes consistently show up in forex statistics and market reports.
According to the Bank for International Settlements, the most traded currency pairs are also the most liquid, accounting for over 70% of the global forex market volume. You can find USD-based pairs like EUR/USD, USD/JPY, and GBP/USD dominating this list.
Now, think. Why do traders prefer USD-based pairs? The U.S. dollar underpins the global economy as the primary reserve currency, which makes USD pairs the preferred choice for most forex traders. Pairs like USD/JPY and USD/CNY reflect this preference.
In 2022, USD-based pairs represented over 60% of total trades in the forex market. Economic strength, influence, and political stability contribute to USD’s dominance, which makes it a reliable choice in the forex market.
But how to determine if a currency pair is most-traded and whether it will remain popular or not? You need to keep an eye on factors like:
- Economic strength of each country
- Interest rates set by central banks
- Political stability and government policies
- Trade relationships and agreements
- Market liquidity and trading volume
- Commodity prices (for commodity-linked currencies like AUD and CAD)
- Inflation rates and economic indicators (e.g., GDP, employment)
- Geopolitical events and global crises
- Currency’s role as a reserve currency (e.g., USD’s dominance)
All these factors shape how currency pairs behave, which influences trader decisions and impact market movements.
What are the Top Traded Currency Pairs in the World?
The forex market revolves around certain currency pairs that dominate trading volume. Each top pair provides liquidity, stability, and profit opportunities, which make them favorites among traders.
Let’s take a deep look at each major currency pair, covering what it represents, why traders prefer it, and how it shapes trading decisions.
EUR/USD (Euro/US Dollar)
The EUR/USD pair links the European Union’s euro and the U.S. dollar, which together represent the two largest economies in the world. You find this pair leads the market, accounting for around 23% of daily forex volume, according to data from the Bank for International Settlements.
This currency pair’s high liquidity means you face tight spreads, which makes EUR/USD ideal for frequent trades.
If you expect strong economic growth in the Eurozone, you may buy EUR/USD. So, you may profit as the euro strengthens against the dollar.
USD/JPY (US Dollar/Japanese Yen)
The USD/JPY, which represents the U.S. dollar and the Japanese yen, is a stable, low-volatility pair. It’s known as the “Gopher”, backed by the strong economic relationship between Japan and the U.S. USD/JPY. It attracts traders who look for conservative trades with lower risk.
Japan’s role as an economic powerhouse in Asia and the yen’s reputation as a safe-haven currency add appeal to USD/JPY for long-term traders.
See when the market uncertainty rises. You then may go long on JPY, as it is very likely to help capture increased demand for the yen as a safe haven.
GBP/USD (British Pound/US Dollar)
Called the “Cable,” the GBP/USD links the U.K.’s pound with the U.S. dollar. Traders select GBP/USD for its volatility, which creates room for high-profit potential but demands careful risk management.
The pair’s behavior often mirrors the health of the British and U.S. economies, which makes it responsive to economic data and central bank policies. However, such volatility means GBP/USD suits seasoned traders better, as they can navigate swift price shifts and use volatility to their advantage.
If the Bank of England signals a policy shift indicating pound strength, you may buy GBP/USD, which captures potential upward moves.
USD/CHF (US Dollar/Swiss Franc)
The USD/CHF, which is known as the “Swissie,” offers a secure option for traders who seek to hedge against market instability. Switzerland’s economy, which is known for financial stability and neutrality, makes the Swiss franc a preferred currency during times of geopolitical tension. You’ll find USD/CHF particularly attractive during uncertainty, as it holds value well when other assets decline.
Now, if you prioritize safety and stability, USD/CHF provides a reliable choice. Wait for periods of heightened volatility. Then you might short USD/CHF, which capitalizes on a potential increase in demand for the Swiss franc as a haven.
USD/CAD (US Dollar/Canadian Dollar)
USD/CAD currency pair is known as the “Loonie”. Because it reflects the U.S.-Canada trade relationship, with a special connection to the oil market. Yes. Canada’s economy relies heavily on oil exports, which ties USD/CAD movements closely to oil prices.
When oil prices rise, the Canadian dollar often strengthens against the U.S. dollar, which provides an opportunity for traders to speculate on commodity trends through this pair. USD/CAD has an interesting dynamic for traders who track both forex and commodities markets.
If oil prices surge, you may short USD/CAD, which allows you to profit from a stronger Canadian dollar.
AUD/USD (Australian Dollar/US Dollar)
The AUD/USD, or “Aussie,” links the U.S. dollar with the Australian dollar. Australia’s economy depends on exports like iron ore and coal, which makes AUD/USD sensitive to global commodity prices.
Traders favor AUD/USD for its connection to the commodity sector, which provides a hedge against inflation and aligns with global trade trends. The pair serves traders who look for diversification through a connection to commodity prices rather than purely financial indicators.
If commodity prices increase globally, you might buy AUD/USD, which captures the boost in the Australian dollar.
USD/CNY (US Dollar/Chinese Yuan)
The USD/CNY pair reflects the U.S.-China economic relationship, which makes it an indicator of trade dynamics between the two countries. As China’s economy grows, the relevance of USD/CNY has risen, which draws traders who look for insights into the balance of economic power.
Changes in U.S.-China trade policies, tariffs, or economic growth data directly impact USD/CNY, which makes it ideal for traders interested in emerging markets and long-term shifts in global trade.
If tensions ease between the U.S. and China, you may go short on USD/CNY, which helps capitalize on a stronger yuan as economic optimism grows in China.
Relevant Read: How Do Forex Traders Make Money?
Are Minor Currency Pairs Worth Trading?
Minor currency pairs, which exclude the U.S. dollar, can indeed be worth trading if approached with the right strategies and understanding.
It’s worth noting that minor currency pairs combine major currencies like the euro (EUR), British pound (GBP), Japanese yen (JPY), or Australian dollar (AUD) with each other rather than with USD. Examples include EUR/GBP, EUR/AUD, and GBP/JPY.
Now, if you’re considering to trade minor currency pairs, then fully acknowledge the following factors:
Less Liquidity, But More Volatility
Minor currency pairs tend to have lower liquidity than major pairs, which leads to wider spreads. This characteristic may make trading slightly more expensive. However, less liquidity also results in greater price swings, which translates to volatility.
Can you navigate or benefit from larger price moves? If yes, then you may find minor currency pairs appealing. Because they can offer significant opportunities in both long and short trades.
For instance, GBP/JPY is known for its volatility, which might interest traders looking to capitalize on rapid movements.
More Influenced by Regional Factors
Minor pairs often respond strongly to specific regional or economic conditions that affect the paired countries. For example, EUR/GBP can fluctuate based on developments in the European Union or U.K. political shifts. If you follow these regional news cycles closely, minor pairs offer opportunities to trade based on focused, timely information.
Suppose the European Central Bank signals policy changes that may affect the euro. Now, if you trade EUR/GBP or EUR/AUD, it could allow you to benefit from the euro’s movement without needing to involve the U.S. dollar.
Diversification Away from the U.S. Dollar
Trading minor pairs provides an opportunity to diversify away from USD-based pairs, which may help balance portfolios during U.S.-centric economic volatility. During times when the U.S. dollar is highly volatile, trading pairs like EUR/CHF or AUD/NZD can help you avoid the direct impact of USD fluctuations.
For instance, if there’s speculation on Fed policy impacting USD, traders may prefer pairs like EUR/JPY or GBP/CHF to maintain a broader portfolio perspective.
Correlation with Commodity Prices
Some minor pairs are connected to commodity prices, as with AUD/NZD, which reflects the export economies of Australia and New Zealand. It’s important to note that a rise in demand for commodities can impact both currencies. But trading them together in a pair can help isolate their relative performance.
For instance, if Australian iron exports rise, you might see AUD strengthen over NZD, which creates a trade opportunity within this commodity-linked relationship.
Why Do Traders Choose Cross-Currency Pairs?
- Diversifies trades away from the U.S. dollar
- Capitalizes on regional economic trends and relationships
- Offers unique opportunities based on non-USD economic data
- Provides a hedge against USD volatility
- Allows tailored strategies for specific global market movements
- Utilizes geopolitical events in specific regions for profit potential
Should You Trade Exotic Currency Pairs?
Okay, here’s the truth. Trading exotic currency pairs can deliver huge rewards, but it’s a risky game.
Exotic pairs involve a major currency, like the U.S. dollar or euro, paired with a currency from a smaller or emerging economy — think USD/TRY (U.S. dollar and Turkish lira) or EUR/ZAR (euro and South African rand). The catch? Low liquidity and wide spreads. While major pairs like EUR/USD have spreads under a pip, exotic pairs can go as high as 10 pips, which makes each trade more costly. Understanding pips in detail is crucial for managing the higher spreads and costs of trading exotic pairs, which will improve your trading experience.
Here’s a fact to consider: according to the Bank for International Settlements, exotic pairs account for less than 5% of total forex trading volume. That low volume means entering and exiting positions can be tricky, especially during high volatility. But such price swings are exactly where the potential lies. In 2022, the USD/TRY moved over 10% in one day amid economic shifts in Turkey. So, if you’re ready to embrace the risks, exotic pairs could offer bigger rewards than traditional pairs.
Emerging market economies are also tightly linked to commodities, which adds another layer. Take USD/ZAR, for example. The South African rand often follows gold prices since gold is a major part of South Africa’s economy. If you’re up on commodity trends, you could time trades in USD/ZAR when global gold prices shift. But keep in mind, these currencies react sharply to any political or economic shake-ups, so price movements can be sudden and unpredictable.
If you’re seeking high-risk, high-reward trades and have an eye on global market factors, exotic pairs offer a unique challenge. But the unpredictability, wide spreads, and potential for rapid market shifts mean you need to tread carefully.
Remember that this isn’t a play for quick, easy gains — it’s a market for those who know the risks and are ready for them.
How to Choose a Currency Pair to Trade?
- Assess Liquidity: Look for pairs with high trading volume, which reduces spreads and makes it easier to enter and exit trades quickly. Major pairs like EUR/USD offer high liquidity.
- Analyze Volatility: Decide if you prefer stability or frequent price swings. For consistent movement, choose less volatile pairs like USD/JPY. For high-risk/high-reward trades, consider GBP/USD or exotic pairs.
- Evaluate Economic Factors: It’s important to check the economic strength of each currency’s country. Currencies from strong economies, like the USD, are more stable, while emerging market currencies can be more unpredictable.
- Check Trading Hours: You must go for pairs aligned with your active trading hours. For example, EUR/USD is most active during the overlap of European and U.S. markets, increasing opportunities.
- Consider Correlation: Some pairs move in sync or opposites due to economic ties. For instance, AUD/USD and NZD/USD often correlate due to Australia and New Zealand’s shared economic drivers.
- Identify Your Strategy Fit: Match pairs with your trading strategy. Long-term traders often choose stable pairs like USD/CHF, while day traders may prefer volatile pairs like GBP/JPY for quick opportunities.
- Account for Economic News Impact: Choose pairs based on the news events you follow. For example, if you track U.S. economic data, trading USD-based pairs will allow you to capitalize on news impacts.
- Understand Spread and Costs: Look for pairs with tighter spreads, as this lowers trading costs. Major pairs generally have lower spreads compared to exotics, which helps maximize profit potential.
Final Words
So, it’s clear that EUR/USD, USD/JPY, GBP/USD, and USD/CAD are the most traded currency pairs. These pairs dominate due to their high liquidity, lower trading costs, and strong connections to stable, powerful economies.
Ready to take on the Forex market? Focus on pairs that align with your strategy, risk tolerance, and the market hours that best match your availability for the most strategic approach to trading.
