Top 10 Currency Pairs: Traded in Forex
The value of one currency is quoted against the value of the other, forming a currency pair. The currency that is listed first.
With hundreds of currency pairings to choose from, Forex is the world's largest and most volatile market. We shall learn about the most popular and most popular currency combinations in the market to make things easier.
What are the most popular global currency pairs?
Before we talk about the concept of currency pairs, we must get acquainted with the most famous world currencies, the currencies of foreign countries have economic weight and they are eight currencies:
- The US dollar is the currency of the United States of America and is nicknamed the Buck
- Fiber is a nickname for the Euro, which is the currency of the European Union.
- The British pound sterling (GBP) - the currency of Britain - is nicknamed the Cable
- JPY - which is the currency of Japan - and is nicknamed Yen or Yen
- Australian dollar AUD - the currency of Australia - and nicknamed the Aussie or Aussie
- The New Zealand dollar (NZD) - the currency of New Zealand - is nicknamed the Kiwi
- The Canadian dollar CAD - the currency of Canada - is nicknamed the Loonie
- The Swiss franc (CHF), is referred to as Swiss or Swissy.
The concept of the forex pairs system
Trading in the currency market, often known as forex, differs from stock market trading in that it involves two currency pairs; when you buy one currency, you must also sell another, akin to the system of exchange or barter.
The quoted price of currency pairs represents how much of the quote currency you will need to spend to buy one unit of the base currency.
For example, you have an amount of US dollars and you went to a currency exchange office to exchange the dollar for the equivalent of the Saudi riyal, note that the process contains two currencies and not one currency, you sold dollars to buy the Saudi riyal according to the exchange rate of the US dollar against the Saudi riyal, In short, this is what is done in the currency market.
The first currency in a currency pair is called the base currency and the second is called the counter currency, and each currency pair has an exchange rate.
The base currency in the previous example is the US dollar, which has the symbol USD, and the counter currency is the Saudi riyal (SAR). The exchange rate is the amount of the counter currency "the Saudi riyal" required to buy one unit of the base currency "the US dollar," which is 3.7509 Saudi riyals.
Best forex pairs to trade
Currency pairs in Forex differ in terms of trading volumes, popularity, or the degree of difficulty in executing their transactions, and liquidity in the markets, but we can say that the most popular classification of currency pairs can be divided into 3 categories, which are:
- Major currencies are those that are traded in the markets. Opinions differ on how many major currency pairs there are, but most of the listings will have EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
- Commodity currencies are currency pairings whose value is linked to a commodity like oil, coal, or iron ore. AUD/USD and USD/CAD are the commodities on this list.
- Cross currencies are currency pairs that do not include the US dollar. A couple of cross-currency pairs reached this top ten, EUR/GBP and EUR/JPY
In the following lines, we will shed light on each concept of each classification and the currencies it includes:
Major currency pairs
They are currency pairs in which the US dollar is one of the parties, whether as a base currency or as a counter currency, and the other party is a currency of a large industrial country, such as the eurozone countries, Japan, Switzerland, Canada, Canada, New Zealand, and so on.
- EUR/USD Euro Dollar eurusd currency
- GBP/USD British Pounds Dollars
- USD/JPY Dollar Yen
- USD/CHF Dollar Franc
- USD/CAD US Dollar Canadian Dollar
- AUD / USD Australian Dollar US Dollar
- NZD/USD New Zealand Dollar US Dollar
The most volatile forex pairs: which are the strongest?
Because the US dollar has been the undisputed master of the world's currencies since the end of World War II and the signing of the Bretton Woods Agreement, which linked currency rates to the US dollar, the US dollar is the main monetary reserve currency for central banks in various governments, as well as a measure of pricing most commodities such as gold, oil, silver, and other precious metals, it can be said that the US dollar is the undisputed master of the world's currencies.
It is worth noting that dealing with currencies or their major pairs is one of the most important features of forex for traders, as the major currencies (the US dollar, the British pound, the euro, the Japanese yen, the Swiss franc, the Canadian dollar, the dollar Australian and New Zealand dollars) account for roughly 90% of the currency market trading volume, and thus following them provides good trading opportunities.
Thus, these currencies’ acquisition of a large amount of trading volume in the currency market contributed to the increased interest and follow-up of traders and investors on the major currency pairs in forex.
Cross-currency pairs
Cross-currency pairs are currency pairs that do not include the US dollar, and because liquidity and trading volumes on cross currency pairs are typically lower than on major currency pairs, you will notice that their spreads or spreads are higher, and cross currency pairs are of interest and follow-up to forex speculators because of their strong movements, particularly those pairs that include both ends of the major currencies.
The most popular cross currency pairs that are of interest to forex traders:
- EUR/GBP Euro British Pound
- EUR/JPY Euro Yen
- EUR/CHF Euro Franc
- GBP/JPY British Pounds Yen
We note the trading volumes of some of the cross pairs in the previous currency pairs trading volumes table, and how some of them compete with the major pairs in liquidity and strength.
Exotic, rare, or exotic currency pairs
Emerging market currencies are included in exotic or exotic currency pairs in forex. These pairs are not as liquid or traded as financial markets, and the spreads are typically significantly wider. These currency combinations are pitted against the US dollar or big currencies like:
- USD/DKK US Dollar Danish Krone
- USD/HKD US Dollar Hong Kong Dollar
- EUR/ZAR Euro South African Rand
- GBP/SEK Pound Sterling Swedish Krona
Note that the order of the first currency "base currency" or the second currency "counter currency" in forex pairs is a standard designation that is never modified; for example, the Australian dollar pair (AUD/USD) will remain the same as the Australian dollar. The currency trading mechanism, which we explain in detail in the following article, in which we highlight the details of the trading method, cannot be called (USD/AUD). Determining the base currency from the counter currency is important in the currency trading mechanism, which we explain in detail in the following article, in which we highlight the details of the trading method.
To get started in forex trading, visit our article on what is forex? Top 10 Cryptocurrency Trading Basics. For more advanced traders, visit our article on Top 7 Steps To Learn Successful Trading.
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