The Top 10 Forex Currency Pairs to Trade in 2021
Best forex pairs to trade in 2021
Planning to trade forex pairs in 2021? With more than 100 currency pairs, choosing the best forex pair to trade in 2021 is not an easy thing to do. Fear not, we at Trading Education have put a list together of the best currency pairs to trade in 2021!
Trading Forex is challenging, but there are ways to make Forex trading easier.
One of the secrets to profiting from trading Forex is to become familiar with the best currencies to trade. Not all Forex currencies are created equal. Some currency pairs are more suitable for experienced traders, and some are better for beginners. This guide will discuss the best Forex pairs to trade for beginners and intermediate Forex traders.
What are the benefits of Forex trading with the top 10 Forex currencies?
The main advantages are these currency pairs have good liquidity and volume, making it easier and potentially quicker to make money from trading Forex. They have price stability and a level of predictability. Most of the top 10 Forex currency pairs trend for long periods, making it easier for traders to enter the Forex market with the trend pullbacks.
Which currency pair is most profitable in Forex, and what makes the best currency pairs for beginners?
All currency pairs can be profitable, depending on liquidity and volume plus the Forex trader's skill. In the list of best Forex currencies to trade, there is a mix of currency pairs suitable for all levels of traders, and we explain why they are the best Forex pairs to trade.
The guide makes it clear which currency pairs are best for trading Forex. Some of the top 10 Forex currencies to trade are popular with beginners, and others maybe not so much.
Forex beginners scour the market looking for a trade, but this is the wrong approach. Becoming familiar with one or two currency pairs teaches you exactly how that pair reacts in the market. You recognise what happens to price action after economic news announcements, and you can spot emerging patterns on the charts.
Each Forex currency pair has a unique personality. Some currency pairs may correlate, but each has differences.
This guide takes a close look at the top 10 currency pairs to trade in 2021. That doesn't mean you trade all ten currency pairs. If several currency pairs correlate and you open trades, you are, in effect, significantly increasing your risk. If the price goes against you for one currency pair, it goes against you for the others, meaning you may lose all trades.
We look at how each Forex currency pair moves and open up the charts to assess current price action and analyse emerging high-probability trades.
As a bonus, we point out potential setups for each currency pair in the top 10 Forex currency pairs to trade, setups for Forex trades that you can take right now.
By the end of the article, you will make a preference for one or two currency pairs you like and potentially have a couple of Forex setups to watch.
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- What Are The Types Of Currency Pairs That You Can Trade?
- The Top 10 Forex Currency Pairs to Trade
- Recap of the Top 10 Forex Currency Pairs to Trade
What Are The Types Of Currency Pairs That You Can Trade?
There are three categories of Forex currency pairs you can trade
- AUD/USD (Australian Dollar – US Dollar)
- EUR/USD (Euro – US Dollar)
- GBP/USD (British Pound – US Dollar)
- NZD/USD (New Zealand Dollar - US Dollar)
- USD/CAD (US Dollar – Canadian Dollar)
- USD/CHF (US Dollar – Swiss Franc)
- USD/JPY (US dollar – Japanese Yen)
The majors are popular with Forex traders because liquidity and volume are good. You may notice that all the pairs include the US dollar, the currency most used for global trading and the other countries also have considerable financial power. These factors create liquidity and volume every trading day.
The minor currency pairs don't include the dollar but other global currencies like the Euro and Japanese Yen. Liquidity may be lower than the major currency pairs, but that said, with over $6.6 trillion traded five days a week, the minor pairs still have sufficient liquidity for trading. The minor currencies are Japanese crosses, Euro crosses and Pound Sterling crosses. Examples are EUR/CHF, CAD/CHF and NZD/JPY, and many more.
The Exotic currency pairs have poor liquidity and volatility and are from emerging economic nations like Brazil. The exotics include a major currency such as the US dollar. For example, USD/ZAR – (US Dollar/South African Rand). Due to the lack of liquidity, we won't be featuring the exotics in the top 10 Forex currency pairs to trade.
The Top 10 Forex Currency Pairs to Trade
Down to the nitty-gritty, the following section looks at each Forex currency pair in the top 10 list of the best currency pairs to trade.
The list is in alphabetical order. These Forex currency pairs can help you find good trades and become a profitable Forex trader.
The top 10 Forex currency pairs to trade in 2021 are:
- AUD/USD - (Australian Dollar /US Dollar)
- EUR/GBP - (Euro/Pound Sterling)
- CAD/JPY - (Canadian Dollar/Japanese Yen)
- EUR/USD - (Euro/US Dollar)
- GBP/JPY - (Pound Sterling/Japanese Yen)
- GBP/USD - (British Pound/US Dollar)
- NZD/USD – (New Zealand Dollar/US Dollar)
- USD/CAD - (US Dollar/Canadian Dollar)
- USD/CHF - (US Dollar/Swiss Franc)
- USD/JPY - (US dollar/Japanese Yen)
AUD/USD - (Australian Dollar /US Dollar)
The above image is the daily chart for AUD/USD
AUD/USD is an excellent currency to trade because the price action is responsive to price zones, creating patterns of interest for high probability trades.
The price of AUD/USD went sideways in a range from mid-May to mid-June 2021 when it broke below and made a lower low and lower high.
The 50 EMA (blue line - Experiential moving average) crossed over the 200 EMA (red line), indicating a possible move to the downside.
Since mid-July, the price has stuck on a strong historical area of support at $0.7320.
AUD/USD Potential setup
Look for one of the following moves:
- AUD/USD breaks below the support zone (blue horizontal line) and retests and presents bearish price action (a big red candle)
- AUD/USD breaks above the descending channel, retests support and presents bullish price action (a large green candle)
Either of these setups is a high probability, especially on the daily chart. When either of the above scenarios occurs, move down to the 1-hour or 4-hour chart for a precision entry.
The first profit target is $0.7420, as that was the last high.
The Australian dollar is affected by commodity prices, and Australia has an active trading relationship with China. Be aware of the fundamentals when trading AUD/USD.
Have you considered trade the AUD/USD Pair?
EUR/GBP – (Euro/Pound Sterling)
The image above is the daily chart for EUR/GBP
We’re sure you'll agree that's a weird-looking chart!
Tracing historical price action back to 2020, the EUR/GBP is unstable. With the ongoing Brexit debacle and Covid-19 pandemic, this currency pair displays vast uncertainty. The enormous price spikes are undoubtedly economic news causing a crazier than usual reaction from the market.
Why have we added this currency pair to the top 10 currency pairs to trade? Usually, EUR/GBP is an excellent pair to trade, with high probability setups and good liquidity.
However, right now, it is pointless to consider trading EUR/GBP. But, it is great to add it here because it's a fabulous example of when NOT to trade.
Compare this chart with the AUD/USD chart above so you can ascertain what makes a high probability trade setup in Forex and when you shouldn't trade a currency pair.
EUR/GBP Potential Setups
There are no potential setups for EUR/GBP until the price action becomes more stable.
Would you trade the EUR/GBP?
CAD/JPY – (Canadian Dollar/Japanese Yen)
The above image is the daily chart for CAD/JPY
Compare this chart to EUR/GBP above. Recognise the difference between a stable market and an unstable market for trading Forex currency pairs.
CAD/JPY trended upwards from November 2020. It broke a strong resistance zone in April 2021 (red horizontal line) and was bullish until June 2021.
As the price fell, it tested support at $85.80 (which was previous resistance). It landed on another support zone which coincided with the 200 EMA (Red wiggly line).
Along the way, CAD/JPY created a descending channel.
On 10th August, the price broke out above the descending channel but has met a previous resistance zone at $88.30 and the 50 EMA (wiggly blue line).
Trade setups are occurring.
CAD/JPY Potential Setups
- CAD/JPY breaks above resistance at $88.30, retests and gains momentum to the upside, with the first profit target of $90.00
- The price retests the top of the descending channel and breaks above $88.30
- Resistance holds, and CAD/JPY price returns to support at around $85.80
Watch for one of these three scenarios for a high probability trade on CAD/JPY.
Oil prices influence the Canadian dollar, so it's worth checking the charts for oil to see if the prices are bearish or bullish.
Have you considered trade the CAD/JPY Pair?
EUR/USD - (Euro/US Dollar)
The above chart is the daily chart for EUR/USD
EUR/USD is a popular currency pair for beginners to Forex trading. The Euro and the US dollar are transparent currencies.
Price action is easier to read with technical analysis. EUR/USD has volatility, but not so much as to create price spikes.
EUR/USD has key support and resistance zones. These are the areas on the charts where Forex traders sit up and take notice, waiting for a break of or retest of support or resistance.
Today, August 2021, following bearish momentum, EUR/USD is at a support zone at around $1.1710. The 50 EMA and 200 EMA have crossed over.
With a bit of patience, there are potential trade setups for EUR/USD.
EUR/USD Potential Setups
- EUR/USD breaks below support. Target support underneath at $1.1610
- At support of $1.1610, wait for an indication of direction. Price may break below and bounce back up to $1.1710.
- EUR/USD may be forming a large range between $1.1710 and $1.2250. This scenario is less likely because the EMAs have crossed over, and price action is now trading below.
When we mention support and resistance zones, these are not typically one specific price. A price zone is a little flexible but centred around the reaction price.
EUR/USD is reactive to economic news, especially the monthly non-farm payroll announcement on the first Friday of each month. Avoid trading at these times.
Would you trade the EUR/USD?
GBP/JPY – (Pound Sterling/Japanese Yen)
The above chart is the daily chart for GBP/JPY
GBP/JPY is a high volatility pair and excellent if you enjoy trading a trending currency pair.
Since June 2020, GBP/JPY has trended upwards. From March 2021, GBP/JPY consolidated in a 500-pip range between $1.47.97 and $1.5308. The last time GBP/JPY reached this high was April 2018.
The current resistance zone is holding for several days, but price action is weak, indicating uncertainty in the market.
GBP/JPY Potential Setups
- GBP/JPY breaks resistance and retests the zone before gaining momentum to the upside. The potential target is $156.00. The last time price action was at this price was February 2018, so split your trade into two or three micro-lots. Make your first target $1.5400 and then a third of the way to $156.00
- GBP/JPY breaks below the 50 EMA (blue line) and heads back to the bottom of the range. Split two or three trades to target areas before support and make your final exit near to $148.00
Japanese central banks monitor the Yen closely. If the Japanese Yen gains strength, the banks intervene because currency prices significantly impact international trade costs and profits.
Have you considered trade the GBP/JPY Pair?
GBP/USD - (British Pound/US Dollar)
The above image is the daily chart for GBP/USD
GBP/USD is similar to GBP/JPY in that price action often trends for long periods.
For a considerable time, GBP/USD price action has ranged between $1.40 and $1.38. During mid-July 2021, the price broke support at $1.3680, but it was a fake-out. GBP/USD broke through the 200 EMA with momentum and headed back up to $1.40, falling back into the range.
GBP/USD Potential Setups
There's not much to play with on this chart. The price could return to support and continue in the range.
- Watch for price momentum within the range
- If the price breaks below $1.3680, wait for a clear retest and bearish momentum. The last time the price reached support, there was no retest
The pound and the US dollar are reactive to global economic news. Always check fundamentals for both countries before trading GBP/USD.
Would you trade the GBP/USD?
NZD/USD – (New Zealand Dollar/US Dollar)
The above image is the daily chart for NZD/USD
NZD/USD is a currency pair that likes to range, so there is often a long wait for a breakout. You can, however, trade the 100-pip range as long as you remain alert for a breakout.
On the chart, one thing is happening of note. The 50 EMA and the 200 EMA are squeezing together. The price is trying to stay above, which would cause an EMA crossover. On the daily chart, such a crossover can indicate a change of direction.
NZD/USD Potential Setups
- Wait to see what price action does at $7090. If the price breaks above, wait for a retest and bullish momentum.
- If price action rejects $7090, and there is bearish momentum, you could grab 100-pips on the way to support.
These aren't the greatest high-probability setups. When browsing the best currency pairs to trade, aim to find a currency pair with the highest probability.
There's no reason to settle for second best if you want to profit from trading Forex.
Have you considered trade the NZD/USD Pair?
USD/CAD - (US Dollar/Canadian Dollar)
The above image is the chart for USD/CAD
USD/CAD began a downward trend in March 2020, turning around in June 2021, forming a small ascending channel. At the end of July, the price broke the ascending channel with a couple of bearish candles. The price retested the channel but has moved sideways since then.
This current price action could be a significant pullback from the downward trend. The gap between the 50 EMA and 200 EMA is narrowing, with the price stuck in the middle.
Bear in mind that USD/CAD can correlate with oil prices so check out what is happening with the oil charts before trading USD/CAD.
USD/CAD Potential Setups
There are better trades available right now than USD/CAD.
- If the price breaks above the 200 EMA (red line) or below the 50 EMA (blue line), wait for a retest and either bullish or bearish momentum as appropriate.
- USD/CAD could return for a retest of the descending channel. If so, wait for a retest and bullish momentum.
Would you trade the USD/CAD?
USD/CHF - (US Dollar/Swiss Franc)
The above image is the daily chart for USD/CHF
USD/CHF is a popular currency pair for Forex beginners and professional Forex traders. Liquidity is good, and the pair is easy to read for technical analysis.
The chart shows an ascending trendline, and the price is currently at the last high and a previous resistance zone (look left to see where the price reversed before). Consider that USD/CHF price action is forming an ascending wedge, where the price becomes squeezed before breaking out.
The 50 EMA and 200 EMA are compressed, showing a level of uncertainty.
USD/CHF Potential Setups
- USD/CHF may return to the trendline and bounce off before moving back up. Look for bullish momentum off the trendline and an EMA crossover.
- If the price breaks below the trendline, wait for a retest and bearish momentum.
Have you considered trade the USD/CHF Pair?
USD/JPY - (US dollar/Japanese Yen)
The above image is the daily chart for USD/JPY
USD/JPY is a popular currency pair for intermediate and professional traders. The pair has trended upwards since January 2021. The price pushed above resistance but, within a few days, returned to break the zone. Now, an interesting setup is forming for a high probability trade.
The USD/JPY broke out of the ascending channel and is currently retesting the channel and testing the resistance zone. USD/JPY has a habit of clinging to a resistance (or support) zone for long periods, but it's worth waiting because once USD/JPY breaks away, it usually gains significant momentum.
USD/JPY Potential Setups
- Watch to see if bearish price action happens at this zone to indicate a move to the downside. The price may retest resistance several times.
- Price could push back into the ascending channel and carry on upwards. However, the price still has to overcome resistance. If price action becomes bullish, a good exit target is $112.00, another area of historical resistance.
Would you trade the GBP/JPY?
Recap of the Top 10 Forex Currency Pairs to Trade in 2021
Other than EUR/GBP, each currency pair in the list of the top 10 Forex currency pairs to trade has potential setups for taking a high probability trade.
What makes these currency pairs best to trade is liquidity and volume. But wait for price patterns forming on the charts before taking a Forex trade for a profit.
The price stability of currency pairs is essential. The EUR/GBP is a perfect example of a lack of price stability, showing you when not to trade Forex. If you look at a chart and trade potential isn't immediately apparent, move on to another chart. Pick any of the top 10 popular Forex currency charts, and you will find a trade ready or almost ready to enter the market.
We all know that there is a 95% failure rate for Forex traders. But it really doesn't need to be that way. If you stick with these top 10 Forex currency pairs, you can become a successful Forex trader.
Barring EUR/GBP, right now, trade setups are forming for each currency pair. Decide which currency pair has the best potential. For instance, if GBP/JPY continues in the range, you potentially have 500-pips as your top target. For a retail trader, 500-pips could represent a month's profit.
Instead of taking dozens of Forex trades a day, pick one or two great Forex setups and build your Forex account in this way.
Forex trading does not have to be complicated. Do what the other novice Forex traders do not do. Follow this guide to the top 10 Forex currency pairs to trade and watch your Forex account grow each week.
Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor's financial circumstances.
Trading or investing in financial instruments such as cryptos may not be suitable for all investors. It does involve risk and the possibility of a loss of capital. There are no guarantees for profiting from cryptocurrencies, and it's advisable only to risk what you can comfortably afford to lose.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Trading Education.
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Why is there a 95% failure rate for Forex traders?
Forex traders don't fail because trading Forex is difficult. In reality, the trading process is simple. With a bit of knowledge and experience, anyone can make money from trading Forex currencies.
So why do so many traders fail?
The secret to successful Forex trading is your mindset. Professional Forex traders know not to trade if they lack focus or have just had a row with their partner.
Novice retail Forex traders fail because they:
- Trade with a gambling mindset
- Take too many trades
- Fixate on watching open trades
- Use leverage
- Revenge trade after a loss
- Trade with lot sizes too large
- Do not understand or manage risk
- Fail to set stop losses
- Take profits off the table too soon
- Are addicted to having open trades
Successful Forex trading is more about NOT doing than doing. Address these top reasons for failing in Forex, and you will start making consistent profits from trading the top 10 Forex currency pairs.
What makes a good currency pair?
A good currency pair has liquidity and volume, which means a good money flow in the market for the currency pairs you are trading. Money flow equals price movement and, as you are trying to make money from the price fluctuations, this helps you enter and exit a Forex trade with a profit.
What are the best currency pairs to trade for beginners?
EUR/USD is the most popular currency pair for Forex beginners. It is predictable mainly with clear support and resistance zones. Any of the 10 top Forex currency pairs are suitable for beginners if trending and show explicit price action. But EUR/USD is a great pair to get started trading Forex.
What are the most predictable currency pairs?
When you become familiar with a currency pair, it is easier to predict price action. But, the following five Forex currency pairs are reasonably predictable.
There is a lot of historical data for the most predictable currency pairs, making it easier to do technical analysis from the charts.
The main factor for predictability is transparency for these currencies and, of course, liquidity.
- AUD/USD - (Australian Dollar – US Dollar)
- EUR/USD - (Euro – US Dollar)
- GBP/USD - (Pound Sterling – US Dollar)
- NZD/USD - (New Zealand Dollar - US Dollar)
- USD/CHF - (US Dollar – Swiss Franc)
It is easier to read these five Forex currencies because they're either ranging or trending. When a trend begins, the price action tends to move for a significant period.
Which currency pair is most profitable in Forex?
Profitable Forex trading is possible for most currency pairs, but the major pairs present the best opportunities for Forex traders.
Take note of what is happening economically globally and avoid trading pairs where both countries are experiencing instability. Ideally, choose a currency pair where one currency is weak, and the other is strong. This scenario creates a trending market.
You can use a currency strength meter to help identify the current strengths and weaknesses of a currency.
The most liquid currency pairs present the best opportunities for Forex trading.
What time of day is best to trade the top 10 currency pairs?
As most of the currency pairs in this article include the US dollar, trading in the New York session means high liquidity.
For the British Pound pairs, trading the London session means trading with the money flow in the Forex market.
What time of day will you trade?
If you are in the United Kingdom and can only trade in the evenings, you may struggle to find liquidity. After 6 pm in the UK, the Forex market is quiet. Professional UK day traders have closed their trades for the day. The preferred time for the UK trader is in the first few hours of the London session opening.
Decide which pairs to trade based on what country you reside. If it's possible, aim for the opening session in your country.
If it isn't possible to trade during opening sessions, use the time to analyse and plan potential trades. Then you can set limit orders based on your analysis and check them the following evening.
The 4 Forex trading sessions are:
- London (08:00 - 17:00 GMT)
- New York (13:00 - 22:00 GMT)
- Sydney (22:00 - 07:00 GMT)
- Tokyo (00:00 - 09:00 GMT)
Try not to trade during session overlaps because, during this time, spreads can increase.
What are the best Forex pairs to scalp 2021?
Scalping Forex requires a fast liquid market where the price is moving fast.
Although you are trading on lower timeframes, such as the five-minute chart, it pays to check the daily chart to assess the overall trend.
Professional Forex traders advise new traders to trade with the trend, so identify pullbacks on the lower timeframe and take your trade to the next high or low and follow the trend direction.
Most of the top 10 Forex currency pairs to trade in 2021 are suitable for trading based on a trending market.