If you want to get into the world of forex, one of the first questions that comes to your mind is: which currency pair should I be watching? With about 180 currencies in circulation globally, not all pairs are created equal.
Some can move fast while others are largely stable and predictable. The secret to success is knowing where the action is and positioning yourself wisely. In this guide, we will break down 10 of the hottest currency pairs that investors and traders are paying close attention to at the moment.
1. EUR/USD
The Euro versus the U.S dollar is by far one of the most traded currency pairs in the world. This can be attributed to its high liquidity and low spreads. As a result, it is more preferred by both beginners and institutional traders.
2. USD/JPY
The U.S. dollar vs. Japanese Yen is a perfect choice for traders who keep an eye on interest rates. With the Bank of Japan keeping the rates low and the FED adjusting aggressively, this pair trends aggressively. As such, it is ideal for those who like longer-term plays.
3. GBP/USD
This pair is also known as ‘The Cable’. It is known for big moves and fast reactions to UK economic news. Interestingly, updates from the Bank of England, inflation numbers, and political headlines keep this pair on the edge. Consequently, this pair is suitable for traders who enjoy volatility and fast setups.
4. USD/CHF
Whenever markets panic, most traders tend to run to the Swiss Franc. This aspect makes USD/CHF pair a good barometer of global risk sentiment. Unlike other pairs, this one does not move wildly. Instead, it is reliable, especially during periods of geopolitical tension. That said, to identify a safe-haven currency pair such as the one mentioned above, you need to undertake online forex trading courses. With these courses, you will learn how pairs such as USD/CHF behave in times of uncertainty and why they are crucial for a balanced trading strategy.
5. AUD/USD
Australia’s economy is usually tied to commodities such as iron ore and gold. Thankfully, this pair moves in sync with global resources demand, especially from China. Therefore, it is a good choice for traders who track commodities and macroeconomic trends.
6. USD/CAD
Canada is recognized as one of the world's largest oil exporters. This makes the Canadian Dollar ride the waves of crude oil prices. During oil inventory reports and OPEC news, the USD/CAD pair is very active. Any trader who is energy-conscious must be aware of the behavior of this pair during such moments.
7. EUR/JPY
This pair combines two economic giants: Japan and the Eurozone. It is popular among technical traders who favor pattern recognition and clear price action. Since it is less reactive to U.S news, it offers opportunities when major USD pairs go flat.
8. NZD/USD
Although the New Zealand Dollar does not always make headlines, the NZD/USD pair can provide excellent trading setups. Compared to other currency pairs, this one is exceptionally responsive to the opinions of agricultural experts, climate conditions, and Reserve Bank of New Zealand policy decisions. This characteristic makes this pair suitable for swing trading.
9. USD/CNY
The U.S. dollar and Chinese Yuan pair do not just reflect economic data. Instead, it responds to tariffs, politics, and trade wars. Although it is not a liquid currency like other pairs, it is studied closely, mostly by macroeconomists.
10. EUR/GBP
Unlike other currency pairs, this one is more stable and less prone to wild swings. This makes it suitable for range traders. Even after Brexit, political headlines, diverging inflation trends, and trade adjustments still influence this pair. Despite not being dramatic on the charts, this pair has great profit potential for any trader who is patient and strategic enough.
Final Thoughts
When it comes to forex trading, you are not required to trade every pair. Instead, you need to exchange the right pair that suits your style. Each of the 10 pairs discussed above offers something unique and distinct. If you want to get it right, choose one or two pairs and learn their behaviour, track the news that moves them, and then test their strengths. Once you’ve determined the right currency pair to trade, you can then choose a CFD trading platform that offers optimal conditions for it.
