This article provides a brief overview of seven important currency pairs traded on the Forex market. These are the most popular pairings among traders and investors, and they have great liquidity and low spreads.
EUR/USD (EURO vs Dollar)
The Euro (EUR) is a single European currency that was introduced in 1999 to replace all national currencies in the European Union. Given its status, the EUR is a reflection of the state of the European Union's economy and is highly sensitive to European macroeconomic figures.
The EUR/USD pair leads the Forex market in terms of daily trading volume, accounting for about 20% of total trading volume.
The EUR/USD rate depicts the current exchange rate between the currencies of the EU and the United States. If the pair is increasing in value, it suggests that the EUR is becoming more valuable against the USD, and vice versa. The EUR/USD rate is heavily influenced by economic and political news from these regions.
The EUR/USD pair began trading with a downward trend and eventually touched an all-time low of 0.8200. The pair rose steadily for several years following that, reaching an all-time high a little above 1.6000 in 2008.
Later, because of crises and other problems in Europe, the pair plummeted. The EUR/USD has a lot of liquidity, low spreads, and a daily volatility of around 80 pips.
GBP/USD
The British Pound (GBP) is the official currency of the United Kingdom. It is one of the world's oldest currencies, having first appeared in the twelfth century. The expansion of economic links between Britain and its colonies necessitated the creation of a trustworthy currency for settlements.
GBP/USD is a currency exchange rate between the United Kingdom and the United States. The pair accounts for 15% of the overall trading volume on the currency market. GBP/USD is referred to as "cable" in foreign exchange slang. The phrase stems from the days when currency quotes and other data were communicated via early telegraph cables that were laid between London and New York.
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| GBP/USD Monthly Chart |
The base currency is the British Pound, whereas the quote currency is the US Dollar. If the pair rises, it indicates that the GBP is becoming more valuable against the USD, and vice versa.
The British Pound is seen as a risky speculative currency, resulting in high GBP/USD volatility of around 100 pips each day. The price charts frequently show a number of false breakouts of support and resistance levels due to pair fluctuations.
USD/CHF
The Swiss Franc (CHF) is the country's official currency, which first arose in the seventeenth century to replace a variety of coins that had previously been used for settlements.
The Swiss Franc is regarded as a "safe haven" asset in Europe due to its extremely trustworthy banking system and neutrality in European military wars. As a result, demand for CHF surges during times of crisis.
With a 5% share of overall trading volume, USD/CHF is among the top four most popular currencies on the Forex market.
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| USD/CHF Monthly Chart |
The economies of the United States and Switzerland are compared in the pair dynamics.
The base currency is the US Dollar, while the quote currency is the Swiss Franc. If the pair rises, it suggests the US dollar is gaining strength against the Swiss franc.
Economic and political news from the United States and Switzerland influence the pair's movements. The pair tends to decline during global financial crises when the Swiss Franc becomes more costly, as it is a "safe haven" asset. High liquidity, low spreads, and daily volatility of 50-70 pips characterise this pair.
USD/JPY
The Japanese Yen (JPY) is the Japan country's official currency. As a result of the 1871 monetary reform, it became the most important currency unit in the nineteenth century. In Asia, the yen is regarded as a "safe haven" asset.
The USD/JPY is the third most popular currency on the Forex market, accounting for just under 15% of daily transaction.
The base currency is the US Dollar, while the quote currency is the Japanese Yen. If the pair rises, it suggests the US dollar is strengthening versus the Japanese yen, and vice versa.
JPY, like CHF, serves as a "safe haven" asset in times of crisis. As a result, when stock markets crash and JPY becomes more costly, USD/JPY tends to decline.
When stock markets rise, the pair usually rises with them. High liquidity, low spreads, and daily volatility of roughly 70-80 pips characterise USD/JPY.
USD/JPY Monthly Chart
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