The price of a forex currency pair is an expression of how much of the quote currency is needed to buy one unit of the base currency.
Of the many currency combinations that you can choose from, the following are the top 10 forex currency pairs:
1. EUR/USD
The Euro and the US dollar represent our two major economies globally, and as such, this is the most-often traded currency pair.
This major pair is highly liquid, and the linked exchange rate is reliant on the European Central Bank, the US Federal Reserve interest rates and NFP (non-farm payroll) announcements.
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2. GBP/USD
This major pair is made up of the British pound and the US dollar and consequently relies on how well the British and American economies are faring.
The linked exchange rate for this pair is reliant on interest rates set by the Bank of England and the US Federal Reserve.
One additional factor to monitor concerning this pair is the UK’s departure from the EU.
3. USD/JPY
Made up of the US dollar and the Japanese yen, this major pair has high liquidity.
This is hardly surprising as the US dollar is the most traded currency globally and the Japanese yen is the most traded in the Asian market.
The exchange rate for this pair relies on interest rates set by the US Federal Reserve and the Bank of Japan. Other factors include the regularity of natural disasters in Japan.
4. AUD/USD
Another major, this pair is made up of the Australian dollar and the US dollar.
Factors that affect this pair include the value of commodities exported by Australia such as iron ore, gold and coal, and the interest rates set by the Reserve Bank of Australia and the US Federal Reserve.
5. EUR/GBP
This is a minor pair because it does not include the US dollar. It is made up of the Euro and the British pound.
The close link, geographically and due to strong trade arrangements between Europe and the UK, makes this a difficult pair to predict.
The run up to the UK’s departure from the EU has caused a highly volatile price for EUR/GBP.
Further factors to monitor include interest rates set by the Bank of England and the European Central Bank.
6. USD/CAD
This major pair includes the US dollar and the Canadian dollar.
One factor to monitor for this pair is Canada’s reliance on the price of oil, its main export.
As the price of oil rises, so too does the value of the Canadian dollar.
7. USD/CHF
This major pair, made up of the US dollar and the Swiss franc, is generally seen as a safe investment during times of economic and political turmoil.
Due to the popularity of this pair, there is a high level of data available and hence this pair has a high level of predictability.
8. NZD/CHF
This minor pair includes the New Zealand dollar and the Swiss franc.
New Zealand’s increasing agricultural influence worldwide means that any trader looking to invest in this pair must monitor global agricultural product prices.
The price of this pair is also influenced by the Reserve Bank of New Zealand.
9. USD/CNY
This major pair is made up of the US dollar and the Chinese renminbi or yuan.
CNY, however, refers to the trading of this currency in the onshore Chinese trading market. When the Chinese renminbi or yuan is traded offshore, it is referred to as CNH.
The leading factor to monitor when investing in this pair is the US-China trade war.
Historically, the value of the CNY has dropped against the US dollar due to the efforts of the Chinese government to drive down the price of their exports.
10. USD/HKD
This major pair, made up of the US dollar and the Hong Kong dollar, features a linked exchange rate that allows the HKD to move within a band of HK$7.75/7.85 to one US dollar.
One recent and important factor to monitor in relation to this pair is the ongoing situation in Hong Kong following the protests there in 2019.