One of the most significant choices traders make when trading forex is to decide on the currency pairs to trade.
Forex currency pairs are the amount of a currency against a counterparty and every pair is different from the others in terms of its characteristics and its movements.
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Whether you are a first-time trader or a professional trader, it will matter greatly to your success to understand which currency pairs are most popular and what strategies you should follow to trade them effectively.
Top currency pairs to trade
In this article, we will discuss the 10 top forex currency pairs and give traders a direction on how to trade along with the advantages of implementing your trades using Finxo Capital’s trading platform.
1. EUR/USD (Euro/US Dollar)
EUR/USD is one of the most traded forex currency pairs in the world due to its liquidity and narrow spreads. The euro and the US dollar are the two world’s largest economies, and they relate to each other via factors such as interest rates, inflation, and global political situations.
In the EUR/USD trades, keep a close watch for ECB policy statements and US Federal Reserve policy announcements.
It can have a big impact on this currency pair value when economic indicators such as nonfarm employment, GDP, and inflation come in.
2. GBP/USD (British Pound/US Dollar)
The GBP/USD (aka “Cable”) is another widely traded forex currency pair. It has a reputation for being volatile and presents opportunities to traders.
However, that volatility also carries higher risk because price changes are sometimes abrupt and uncertain, especially in political moments such as Brexit or US monetary policy change.
When you’re trading GBP/USD, stay tuned for the Bank of England statement and economic data out of the UK and the US, as interest rate announcements and employment figures drive price action.
Tip: If you are unfamiliar with volatile currency pairs such as GBP/USD, Finxo Capital’s platform has risk management features such as stop-loss orders for controlling losses in extreme market movements.
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3. USD/JPY (US Dollar/Japanese Yen)
The USD/JPY due to its high liquidity and low volatility compared to other major pairs.
The two are usually driven by Asia’s geopolitical events, U.S. interest rates, and Japanese economic policy.
It is very popular among traders who are trying to implement the carry trade, where traders make money by using a difference in interest rates between two currencies.
When dealing with USD/JPY, keep an eye out for BOJ and US Federal Reserve announcements.
The price is often driven by interest rate differences between the US and Japan.
Pro tip: Finxo Capital offers helpful research products that allow you to review historical data and confidently predict the market direction for USD/JPY currency pairs in the future.
4. AUD/USD (Australian Dollar/US Dollar)
It also depends on commodity prices like gold and iron ore. And that is because Australia exports these resources at a large scale.
Consequently, as commodities rise, the Australian dollar strengthens against the U.S. dollar, and vice versa.
The pair should be a closely monitored combination of US economic reports and Australian economic data, as well as commodity prices around the world.
Instruction: Finxo Capital’s trading platform features rich charting to keep track of currency pairs price movements and make better decisions on trading the AUD/USD.
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5. USD/CHF (US Dollar/Swiss Franc)
USD/CHF is an exchange that works on a one-time basis.
USD/CHF is a “safe-haven” pair as the Swiss franc has historically served as a currency of safety when the world becomes turbulent. In periods of market volatility, the traders typically dive into the Swiss franc, causing USD/CHF to go down.
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Geopolitical, financial crises, and Swiss National Bank (SNB) policies all come into play while trading USD/CHF.
Recommendation: For a more conservative approach to trading USD/CHF can be utilized for safe-haven use in edgy times. You will be able to sign up for the Finxo Capital alerts of anything going on around the world that can impact the franc.
6. USD/CAD (US Dollar/Canadian Dollar)
This pair of currencies is also called the USD/CAD currency pair “Loonie” due to the loon that graces Canada’s dollar coin. The pair’s moves are closely related to oil prices as Canada is one of the largest oil exporters in the world. When the price of oil increases, the Canadian dollar is more secure against the U.S. dollar.
When trading this pair, traders should keep a close eye on U.S. and Canadian economies, as well as global oil prices.
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Guide: On Finxo Capital’s platform, you can get real-time commodity price feeds so it is easy to track oil and anticipate how USD/CAD may move.
7. NZD/USD (New Zealand Dollar/US Dollar)
Like the Australian dollar, the NZD/USD is closely linked to commodity prices globally, including dairy and meat, New Zealand’s major exports.
It’s also influenced by the world’s risk sentiment: if the market is in a positive mood about global growth, the New Zealand dollar tends to appreciate.
Indicator for this pair — Watch global commodity demand and Reserve Bank of New Zealand (RBNZ) announcements.
Tip: Through Finxo Capital’s extensive economic calendar, you can stay on top of all of the news that will affect NZD/USD from interest rate decisions to commodity export reports.
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8. EUR/GBP (Euro/British Pound)
Political and economic forces tend to motivate EUR/GBP, both in the Eurozone and in the UK. After Brexit, the currency pair has fluctuated more as the UK’s trade talks and relationship with the EU continue to evolve.
For traders, there are important announcements from the ECB or the Bank of England and political events such as elections or trade talks.
Tip: Finxo Capital’s comprehensive market analysis services can provide a basis for predicting where EUR/GBP will be priced in the future and help you navigate its volatility.
9. EUR/JPY (Euro/Japanese Yen)
The EUR/JPY pair also tracks European and Japanese economic conditions and global risk appetite. In times of global market optimism, the yen can fall, sending the EUR/JPY higher. On the other hand, during times of fear, the yen could be bolstered by traders who look for safe-haven assets.
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Trades in this pair require attentiveness to European data as well as global market activity.
Tip: Market sentiment signals on Finxo Capital’s platform will let you know if traders are being risk-on or risk-off and can trade EUR/JPY more efficiently.
10 GBP/JPY (British Pound/Japanese Yen)
GBP/JPY is notorious for being extremely volatile and a large price move, which has been the favorite option of many traders. This pair is also impacted by economic and political events in the UK and Japan, as well as by global risk sentiment, which affects its price action.
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It is extremely volatile, and trading GBP/JPY requires a comprehensive risk management plan.
Pro tip: Finxo Capital’s risk management features like stop-loss and take-profit enable traders to limit their loss and protect profits in highly volatile pairs, such as GBP/JPY.
Trading Currency Pairs Forex with Finxo Capital
It takes the right tool and platform to make trades efficiently when trading forex currency pairs.
The trading platform provided by Finxo Capital is simple to use with cutting-edge charting options, up-to-date market data, and many other risk management tools.
Here’s why it’s good to trade with Finxo Capital:
1. High Spreads Finxo Capital provides the lowest spreads in the industry so you can maximize your earning potential and reduce transaction fees.
2. Fast Market Data: Through live forex currency pair quotes, you will get instantaneous market updates and be able to make the best decisions.
3. Resources for Education: Finxo Capital has a library of educational materials from beginner’s guides to expert trading techniques to allow traders to become skilled in no time.
4. Risk Management Services: The platform provides key risk management services such as stop-loss and take-profit orders that are useful to traders in low-grade markets.
A forex trader needs to select the correct forex currency pairs and trade them in the right way.
Whether you’re trading the major pairs such as EUR/USD or a more extreme pair such as GBP/JPY, it’s important to know what you’re looking for and to utilize a reputable platform such as Finxo Capital to maximize your experience.
Keep in mind that forex trading is a lucrative endeavor but very risky too.
Always take proper risk management steps and keep up with market trends to be able to maneuver this constantly changing market effectively.
