Are you finding it challenging to pick the currency pair for forex trading? We can understand your confusion because you have a lot of options. Furthermore, forex experts have different opinions.
This article will provide the details regarding all the famous currency pairs. So, without any delay, let’s dive into it.
List of Best Currency Pairs
Currency pairs hold immense significance in forex trading. Therefore, a forex trader must choose the currency pair carefully. So, here we will enlist the best currency pairs; therefore, you can pick one that suits you the most.
It is undoubtedly the most extensively traded pair around the globe. We can define this currency pair as the United States Dollar conversion to euros. It is worth mentioning that the Euro is a strong and stable currency.
Moreover, it is the official currency of the 19 European Union members. The list of countries that have the Euro as their official currency includes Belgium, France, Finland, Cyprus, Malta, Luxembourg, Spain, Italy, Greece, Portugal, Netherlands, Lithuania, Estonia, Iceland, Malta, Latvia, Slovakia, Slovenia, and Austria.
Bear in mind that this pair has been greatly impacted by the political movements that influence USD or Euro.
JPY or Japanese Yen is Japan’s official currency. After World War II, the JPY lost its value significantly but slowly became stable. Commonly the yen is placed as the reserve currency after the United States Dollar, Euro, and GBP.
It should be noted that the yen value fluctuates greatly daily. But Japan’s central banks buy and sell the yen frequently. The reason behind it is that they want to maintain the exchange rates.
The government of Japan puts a big premium to keep the yen value low. They do so to make their export market more competitive. So, if you are holding the United States dollar, then there are chances that you can make big profits by capitalizing on these fluctuations that happen daily. But it can only be possible if you buy it at the most appropriate time.
Canada is one of the most influential trading partners of the USA. That’s why the value of CAD and USD are pretty close to each other. It is also vital to mention here that the CAD is strongly associated with commodity prices.
Furthermore, the oil price has a huge influence on the CAD; the reason behind it is the dependency of the Canadian economy on the exportation of oil.
If we talk about 2016, the price of oil fell, and as a result, CAD has to suffer to a great extent. Before exchanging USD for CAD, it is highly important to keep an eye on the oil prices and figure out the most suitable time for buying it.
The British pound is the official currency of the United Kingdom( Wales, England, and Scotland). The United Kingdom never made the Euro their official currency when they were a member of the European Union.
When it comes to the list of widely traded currencies, GBP holds third position. In history, two events have influenced the worth of GBP on an extensive basis.
Firstly, in 2007-2008, the fluctuation in GBP was due to the great recession. Secondly, in 2016 GBP lost its worth due to Brexit. Brexit is defined as the vote that can separate the UK from the EU.
CHF or Swiss Franc is Switzerland’s official currency. Most of the investors who invest in the Swiss Franc protect their assets during difficult times. Therefore, it proves to be a Safe-haven currency for the traders.
It means that if another currency value collapses and there is high volatility, the CHF will be better than others. On the flip side, if other currencies are doing well, then the value of CHF will likely lose its value.
In the Great Recession, except for JPY, the value of CHF increased against other currencies. Keep in mind that during the times of movement of major markets, JPY and CHF are the two currencies that are considered safe owing to their low volatility.
AUD or Australian dollar is on the 6Th number in the list of widely-traded currency pairs, and it is Australia’s official currency as well. The AUD value has a close association with the value of the Canadian dollar, and the reason behind it is Canada and Australia’s economies independent relationship.
Furthermore, it is also notable to mention that Australia is the iron ore and coal’s biggest exporter globally; therefore, AUD is also considerably connected with the commodities market. If you want to hold AUD, you must keep a check on the pair of these commodities because they are significant for the economy of Australia.
Well, that’s all about the best currency pairs. We hope that it will assist you in choosing the most suitable currency pair. So, invest your time and learn about all currency pairs in-depth.