Forex (FX) trading is a popular investment strategy among experienced and beginner traders. Many individual investors and businesses trade forex because you can start with minimal investments, and there are many broker companies that offer forex trading services.
If you’re an experienced trader, you might be familiar with the most popular currency pairs, such as EUR/USD, USD/JPY, and GBP/USD. In this article, we’ll go over the five most popular trading pairs and help you understand what makes them so attractive to investors.
The five most traded forex pairs
1. EUR/USD (Euro/US Dollar)
EUR/USD, also known as Fiber, is the most traded currency pair in the world. Based on the latest available data, EUR/USD accounts for about 23% of daily forex trading volume. It’s often seen as an indicator of the health of the Eurozone. In this case, the euro is the base currency, and the US dollar is the quote currency. It indicates how much USD you need to buy one euro. If the pair were reversed (USD/EUR), the US dollar would be the base currency, and the euro would be the quote currency.
2. USD/JPY (US Dollar/Japanese Yen)
USD/JPY, also called Gopher, is the second most traded currency pair with a 13.5% market share as of the latest data. The Japanese Yen (JPY) is often considered a “safe-haven” currency. Traders tend to invest more in safe-haven currencies during times of economic uncertainty or market volatility. This pair is mainly influenced by Asian market fluctuations. It’s often used as an indicator of the health of the Asian economy.
3. GBP/USD (British Pound/US Dollar)
The GBP/USD, also called Cable, is another popular pair. But unlike a relatively more stable pair like EUR/USD, Cable is known to be more volatile. It’s heavily influenced by UK economic fluctuations and political events. GBP/USD is a historic currency pair because of the long-standing economic relationship between the UK and the US.
4. USD/CHF (US Dollar/Swiss Franc)
The USD/CHF pair, also called Swissy, tends to be more stable. Like the Japanese Yen, the Swiss Franc is also considered a safe-haven currency, mainly because of Switzerland’s neutral standing. It’s mainly influenced by Swiss National Bank policies and global risk sentiment.
5. AUD/USD (Australian Dollar/US Dollar)
The final one on the list is the AUD/USD pair, also called Aussie. It accounts for around 5% of daily forex trading volume. This pair is influenced by commodity prices, especially gold and iron ore, as well as other Australian exports.