In this article, you will find out which currency pairs are the most popular among traders, and what every trader should know about them.

EUR/USD – Traders’ best friend

EUR/USD is the most traded pair on the Forex market for several reasons. First of all, the euro and the US dollar are the currencies of the two most powerful regions of the world. Almost daily, these countries publish their economic indicators that have an impact on EUR/USD, sometimes a lot, sometimes not much.

If the Euro area unveils better-than-expected data, EUR/USD will rise. If it’s worse – EUR/USD will fall. The same logic applies to US data. Better-than-expected US data will push USD up and EUR/USD down (since USD is the quote currency ).

In addition, the EUR/USD pair can be boosted by significant political news such as elections, trade agreements, or tensions between countries. The Federal Reserve and the European Central Bank are the main central banks, which intervene in the economy so as to trigger large movements in the Forex market.

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USD/JPY – The battle between the two giants

Both the US dollar and the Japanese yen are safe-haven currencies. In addition, there are two types of currencies: risky (AUD, NZD, GBP) and safe-haven (USD, JPY, and CHF). Safe-haven assets tend to increase in times of economic instability and uncertainty, while riskier currencies – increase in times of economic growth and prosperity. We have to admit that USD/JPY is not as strong as EUR/USD. The greatest liquidity is when the European and US market sessions overlap from 14.00 MT time (GMT+2) to 18.00 MT time (GMT+2).

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GBP/USD, EUR/GBP – His Majesty pound sterling

The British pound sterling (GBP) is the official currency of the United Kingdom. GBP is the third most traded currency after USD and EUR. Interesting fact: although the UK was an official part of the EU for a long time, it never switched to the euro.

As you know, the GBP was heavily impacted by Brexit in 2020. The long and bumpy period of negotiations between the UK and the EU led to major swings in GBP/USD and EUR/GBP. Since the Brexit deal ended, GBP/USD has all the chances to climb to new highs.

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USD/CAD – Oil-dependent Canadian dollar

The main feature of the Canadian dollar is its high dependence on oil prices because Canada is one of the largest oil exporters in the world. The CAD tends to rise when oil prices rise, and conversely, a decline in oil prices pushes the CAD down. As is known, Canadian dollars are also called ‘loonie’ because there is a picture of a loon (North American bird) on the back of Canadian dollar coins.

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AUD/USD – Sunny Aussie

The Australian dollar is seen by many traders as a risky asset. Usually, they go up when the overall market sentiment is risky. That is why the Aussie (short word for AUD) is positively correlated with stocks. In addition, Australia is closely related to China due to its geographical location. Therefore, when China publishes some economic data, not only the Chinese yuan is affected, but also the Australian dollar.

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Hope you find something new and interesting for you! Use this knowledge to your advantage!