Forex Trading Pairs - Top 10 Forex Pairs To Trade
Top 10 Best Forex Pairs To Trade
What Are The Top Currency Pairs? Currency pairs can offer many opportunities for forex traders. Learn more about top forex pairs, including the names of some of the most traded currency pairs.
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What are the top forex pairs to trade?
Though forex trading is attracting more and more people from all over the globe, not many beginners in the world of forex know what the most profitable and tradable currency pairs are.
Hence, to help you choose the best foreign currencies to invest in, we present the top 10 forex pairs to trade. In fact, learning about forex pairs is the most important step to help you master the art of forex trading.
On top of that, we at Trading Education provide an online forex trading course that will guide you step by step on your learning journey and help you establish a profitable forex trading strategy for success.
What are Currency Pairs in Forex Trading?
Forex, defined as a global market for currency trading, is the largest and most liquid financial market in the world. To be more precise, forex trading can be described as the process of buying one currency and selling another at the same time. Thus, currencies are always traded in pairs.
We should note that in forex, there is a base currency and a quote currency. The base one is the one quoted first in a forex pair, while the quote one is the one that comes second. If you decide to trade USD/EUR, for example, the US dollar will be your base currency and the euro will be your quote one.
There is also a bid price and an ask price – the rate you can sell a pair at and the rate at which you can purchase a pair, respectively. The difference between the two is the so-called market spread.
Do not forget that the price displayed for a forex pair shows you how much of the quote currency you’ll need in order to buy the base currency. If the price for GBP/USD is 1.31, for instance, that means that one pound is worth 1.31 dollars.
Types of Forex Pairs to Trade
Given the fact that forex is a global market, it’s no surprise that there is a wide range of forex pairs to trade. There are three main types of currency pairs: majors, minors or crosses, and exotic pairs. Major pairs always include the US dollar, and they are the most popular and liquid in the world. Examples include USD/EUR, USD/CHF, and so on and on.
Forex pairs that do not include the USD are not major pairs. When it comes to minor pairs to trade, we talk about pairs that don’t include the US dollar but at least one of the world’s leading currencies (e.g., the Japanese yen, the euro, the British pound). Examples include NZD/JPY, EUR/CAD, GBP/AUD, and so on and on.
Exotic pairs, on the other hand, include a currency from an emerging economy (e.g., Hungary). Though they are the least traded forex pairs, exotic pairs are worth considering. They may include currencies, such as the Emirati dirham (AED), the Malaysian ringgit (MYR), the Thai baht (THB), the Polish zloty (PLN), and others.
Top 10 Forex Pairs to Trade
While there are different foreign currencies that forex traders can sell and buy, here are the top 10 forex pairs to trade:
1. EUR/USD (Euro/US Dollar)
EUR/USD is the most traded currency pair in the world. Euro (EUR) is the currency of the European Union, while the Dollar (USD) is the currency of the United States of America.
Most European Union countries are characterized by developed economies. Also, in the United States are located the largest companies in the world. Therefore EUR/USD it is the most liquid currency pairing in the world. The European Central Bank has the most significant impact on the Euro, as interest rates play a vital role in the movement of this currency pair. Meanwhile, the most significant impact on the Dollar has the US Federal Reserve - often referred to as the Fed, which eight times a year issues reports on the country's economy, influencing the movement of the Dollar.
We all know that the euro and the US dollar are two of the leading currencies across the globe. Thus, it’s no surprise that this pair is one of the most popular and liquid forex pair to trade in. Note that as the market is going forward, experts expect that the euro will strengthen.
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2. USD/JPY (US Dollar/Japanese Yen)
This is the second most traded forex pair in the currency market, often associated with low spreads. Just like the almighty dollar, the Japanese yen can be seen as a safe haven in times of uncertainty.
Considering the developed economies of Japan and the United States USD/JPY currency trading pair offers a significant quantity of daily trading. It should be noted that these currency pairs are highly volatile, but there are times when they have higher volumes. So it does not mean that you will be non-stop trading USD/JPY, but you have to find the right time.
When we talk about the factors that affect the Japanese economy, the JPY currency is not only affected by economic factors, but also by the many natural disasters that often hit Japan, causing the JPY to move. Otherwise, the Bank of Japan issues reports on which investors rely when making their decisions.
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3. GBP/USD (British Pound/US Dollar)
The British pound and the US dollar are among the most popular forex currencies to trade. Moreover, GBP/USD often allows profitable pips. Interestingly, this pair is known as the Cable as it’s been initially traded via lines across the Atlantic Ocean. Note that due to the uncertainty around Brexit, this pair may experience high volatility.
GBP/USD (British Pound/US Dollar) is the third most traded currency pair in the world, as the UK economy is the fifth-largest in the world.
GBP/USD trading opportunities have increased even more due to the exit of the United Kingdom from the European Union. But, the critical point when this currency pair got a boost is after the fall of the Bretton Woods Agreement, and in the 1980s this currency pair saw volatility that it had never seen before.
The factors that affect this currency pair the most are the economic ones, but also the political situation. Also, the Bank of England Monetary Policy Summary reports each month on the interest rates movements, which has an impact on the decision of investors in their investment projects.
4. USD/CAD (US Dollar/Canadian Dollar)
USD/CAD (US Dollar/Canadian Dollar) is one of the most traded forex pairs. Of course, the forex market is open 24 hours, but there are certain times when this pair experiences higher volumes.
The Canadian Dollar (CAD) was classified along with the US dollar (USD) until 1970 when it began to be controlled by the Bank of Canada. Although the Bank of Canada does not directly affect the currency, it does issue some policies that promote economic growth and influence currency movements. Canada has good trading relations with the USA, which has helped to maintain a good position of its currency in the forex market.
Because of the strong commodities trading between Canada and the USA, there’s no doubt that this is one of the top 10 forex pairs to trade. Note that Canada is a leading exporter of oil and grains. Interestingly enough, the USD/CAD pair is known as Loonie.
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5. AUD/USD (Australian Dollar/US Dollar)
The AUD/USD pair is also one of the top 10 forex pairs to trade. Let’s not forget that Australia’s gold industry is massive, with the Australian dollar being dependent on the country’s gold trading practices.
The Australian to US dollar (AUD / USD) is one of the most preferred currency pairs by trading veterans as well as novice traders. This trading pair, otherwise known as "Aussie" has excellent liquidity and offers many opportunities for daily trading.
Australia's economy is strong, and Australia has good trading relations with the United States. These relationships affect the price movements of this currency pair.
In 2005 Australia and the USA reached the Free Trade Agreement (AUSFTA) in which case the export of US goods to Australia increased drastically. The Reserve Bank of Australia reviews the interest rate every month, which has an impact on the movement of the currency pair.
Have you considered trading AUD/USD pair?
6. USD/CHF (US Dollar/Swiss Franc)
USD/CHF (US Dollar / Swiss Franc) is one of the most traded currency pairs in the forex market. Since the Swiss franc (CHF) does not belong to the currencies with the highest volatility, the economic stability of Switzerland has enabled this currency to ensure a good trading position in the forex market.
Switzerland is otherwise known as a "banking country" and has strong bank policies that can affect the price of its Franc currency (CHF).
Franc (CHF) has the same characteristics as the pound sterling in terms of volatility, price movement and technical part. USD/CHF trading pair has many other benefits such as various trading vehicles, high liquidity and resource availability
This is another popular and profitable forex pair to trade. Interestingly enough, in forex, the Swiss franc is also considered a safe haven - just like the US dollar.
7. NZD/USD (New Zealand Dollar/US Dollar)
New Zealand may not be a big country, geographically. Still, its currency New Zealand Dollar (NZD) is one of the strongest in the forex market, making NZD/USD (New Zealand Dollar/US Dollar) a preferred currency pair among traders.
New Zealand is known as a country that exports agricultural products. High interest in New Zealand has made NZD to USD the preferred currency pair among traders.
The Reserve Bank of New Zealand (RBNZ) monetary policy has an impact on the price increase (NZD). But also rising prices for agricultural products globally could affect the value of (NZD). And, New Zealand's export performance also has an impact on the value of (NZD).
It’s not a secret that New Zealand has a strong agricultural influence across the whole globe. As a result, the pairing between the New Zealand dollar and the US dollar is highly popular in forex trading.
8. EUR/GBP (Euro/British Pound Sterling)
EUR/GBP (Euro / British Pound Sterling) its a popular forex trading pair among traders. The Euro (EUR) had emerged as a digital currency in its infancy, but it is now the official currency of most countries on the European continent.
The countries of the European Union and the United Kingdom are characterized by strong and stable economies, which make EUR/GBP attractive as a currency pair.
The European Central Bank (ECB) reports monthly on the level of interest rates across European countries, thus affecting the euro (EUR) price. The Bank of England (BOE) also has an impact on the movement of the pound price in the UK, so investors have a focus on these banks when it comes to the EUR / GBP trading pair.
This forex pair is highly popular, perhaps one of the most traded ones across the world. After all, the euro is used in many places across Europe. That being said, the uncertainties around Brexit may impose different obstacles on the British pound.
Trade EUR/GBP today
9. USD/HKD (US Dollar/Hong Kong Dollar)
The USD/HKD graph is the US Dollar/Hong Kong dollar currency pair. It shows how much the USD is worth when estimated against the HKD. The USD/HKD currency pair is viewed as an outlandish one, with a fairly little exchanging volume correlation with the major forex pairs.
Hong Kong's economy is one of the best in Asia, and it is deservedly viewed as one of the significant countries where innovation and development have taken place, thus being one of the hubs of the Pacific Rim. Although this pair might have low volatility, predictable movements make it preferable among traders.
This pair is also highly popular to trade. In fact, data shows that the Hong Kong dollar is the 13th most traded currency in the world, while USD/HKD is the 11th most traded currency pair.
Start trading USD/HKD
10. USD/KRW (US Dollar/South Korean Won)
Although USD/KRW (US Dollar / South Korean Won) may not be as attractive as currency pairs that have high liquidity, high volatility still makes this currency pair very present among traders, especially veteran ones.
South Korea is known as a country with high tech cities, such as the capital Seoul. The value of the currency depends on the economic situation and economic growth in the country.
The South Korean Won has had a ton of changes in the twentieth century, including having fixed trade rates on different occasions. Yet, the current gliding esteem was activated in 1997 and followed quickly by a sharp depreciation.
How to Trade Currency Pairs in Forex?
As we can see there are different currencies and forex pairs to trade. Having an understanding of the top 10 forex pairs to trade is crucial to help you make profitable moves. For example, USD/EUR allows you to trade without making unnecessary risks - simply because this pair is not too volatile. In fact, to trade USD/EUR successfully, all you need is basic technical analysis. Besides, this pair often has the lowest spread among many brokers.
At the same time, there are 251 recognized countries and territories, so traders should not limit their choices to popular pairs. Proper technical and fundamental analysis, as well as market news and economic announcements, can help traders master the art of forex trading.
Whether you choose to trade majors or exotic pairs, do not forget that in order to succeed in forex you have to invest in proper forex education. The good news is that there are numerous online courses, books, and seminars that can help beginners establish a profitable trading strategy and succeed in forex. Having a reliable platform and a likeminded network is also crucial.
Last but not least, any trader should create a successful trading routine. No matter if you decide to trade currency pairs part- or full-time, you should find a balance between work and lifestyle to create a mindset that can lead you to financial success.
Forex Trading Pairs - Key Points
- In forex, considered the largest financial market in the world, currencies are always traded in pairs.
- When it comes to forex pairs to trade, we should mention there is a base currency as well as a quote currency. The base one is the currency quoted first, while the quote currency is the one that comes second.
- There are three main types of currency pairs to trade: majors, minors, and exotic pairs.
- The US dollar is one of the most traded currencies around the globe.
- The top 10 currency pairs to trade in forex include EUR/USD, USD/JPY, GBP/USD, USD/CAD, AUD/USD, USD/CHF, NZD/USD, EUR/GBP, USD/HKD, and USD/KRW.
- Traders should explore different trading options and consider different combinations, including exotic pairs.
- In the end, investing your time in forex education to understand what the best forex currency pairs are is crucial to help you succeed in forex.
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Rememer: CFDs are complex instruments and come with a high risk of losing money due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.