Community Forex Questions
What are the most popular currency pairs?
In the Forex market, currency pairings are the only way to trade. When exchanging dollars for euros, the exchange rate reflects how much one currency is worth in relation to the other. For instance, the EUR/USD exchange rate indicates how many US dollars (USD) are needed to buy one euro (EUR).
On the Forex market, currency pairs are identified by symbols. USD is the symbol for the U.S. dollar, and EUR is the symbol for the euro, making the euro/U.S. dollar pair appear as EUR/USD. Other commonly used currency symbols are the Australian dollar (AUD), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD), New Zealand dollar (NZD), and Japanese yen (JPY) (Japanese yen).
Each FX pair will have a market price. For one unit of the first currency, two units of the second currency must be exchanged. It costs 1.3635 U.S. dollars to buy one euro if the price of the EUR/USD currency pair is 1.3635.
On the Forex market, currency pairs are identified by symbols. USD is the symbol for the U.S. dollar, and EUR is the symbol for the euro, making the euro/U.S. dollar pair appear as EUR/USD. Other commonly used currency symbols are the Australian dollar (AUD), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD), New Zealand dollar (NZD), and Japanese yen (JPY) (Japanese yen).
Each FX pair will have a market price. For one unit of the first currency, two units of the second currency must be exchanged. It costs 1.3635 U.S. dollars to buy one euro if the price of the EUR/USD currency pair is 1.3635.
US dollar (USD) is paired with other leading global currencies. The EUR/USD (Euro/US dollar) is the most traded pair, accounting for a significant portion of daily forex volume due to the economic strength of the Eurozone and the United States. The USD/JPY (US dollar/Japanese yen) follows closely, favoured for its liquidity and the yen's role as a safe-haven currency. The GBP/USD (British pound/US dollar), also called "Cable," is another major pair, influenced by UK and US economic policies. The USD/CHF (US dollar/Swiss franc) is popular for Switzerland's financial stability, while the AUD/USD (Australian dollar/US dollar) and USD/CAD (US dollar/Canadian dollar) are commodity-linked pairs, driven by natural resource prices. Additionally, the NZD/USD (New Zealand dollar/US dollar) is traded frequently, though with slightly lower liquidity. These pairs dominate forex trading due to their high liquidity, tight spreads, and volatility, making them attractive to both retail and institutional traders. Cross-currency pairs like EUR/GBP and EUR/JPY are also popular but lack direct USD involvement. Overall, traders prefer these pairs for their stability and predictable market movements.
Jun 27, 2022 17:53