Top 10 Best Currency Pairs to Trade

In this article we will discuss the top 10 best currency pairs to trade, there are many currency pairs in the foreign exchange market, some currency pairs have great directionality, and some currencies have great volatility, but they remain unchanged for a period of time.

Some currency pairs react very strongly to high-impact economic news, while others remain calm. Which trading pair is suitable for trading depends on each trader’s strategy and risk management. There is no correct answer as to which currency pair is best for traders and which is the best forex pairs to trade.

In order to choose the best foreign exchange currency pair, we must consider volatility, spreads, trading strategy, leverage, risk, and money management. There are many types of currency pairs that can be traded on the foreign exchange market. Here, we have selected the “top 10 best currency pairs to trade”.

Best Forex pairs to Trade

List of top 10 best currency pairs to trade.

1. EUR/USD

The currency pair EUR/USD is the short form of the Euro against the US dollar currency pair. Here, the Euro is the base currency and the US dollar is the quote currency.

The currency pair EUR/USD indicates how many US dollars are needed to buy 1 Euro. Buying EUR/USD is known as buying euros. If the transaction price of the EUR/USD pair is 1.2500, it means that it takes 1.25 U.S. dollars to buy 1 Euro.

However, it is important to understand that the base currency of the currency pair is fixed and always represents one unit. The EUR/USD exchange rate may rise because the Euro is getting stronger or the US dollar is getting weaker.

The Euro was originated in 1992 in accordance with the Maastricht Treaty. It was first introduced as an accounting currency in 1999. On January 1, 2002, the Euro began to circulate in EU member states, and in the following years became the currency recognized by the European Union.

This also makes the Euro one of the most traded currencies on the foreign exchange market, second only to the US dollar.

The Euro and the US dollar are very popular because it represents the two largest economies in the world. In all currency pairs, the daily trading volume of the EUR/USD is 28%.

The daily trading volume of EUR/USD is very high, thus ensuring that the currency pair has a large amount of liquidity, and low spreads, and thereby attracting foreign exchange traders to buy and sell the currency pair.

Several factors determine the exchange rate of the EUR/USD, such as the interest rate set by the European Central Bank and the US Federal Reserve.

2. USD/PY

Among the top 10 best currency pairs to trade, the second most popular currency is USD/JPY. USD/JPY is the shortened form of the US dollar against the Japanese Yen pair. Here, the US dollar (USD) is the base currency, and the Japanese yen (JPY) is the quote currency.

The USD/JPY pair indicates how many yen is required to purchase 1 US dollar. Buying USD/JPY means buying the USD. If the USD/JPY exchange rate is 111.50, then we need 111.5 yen to buy 1 USD. Like the US dollar, the Japanese yen is also widely used as a reserve currency.

Because the spread is very low, the trading volume of the currency pair is very high. Its daily translation volume is 13%, ranking second. Its trend behavior and extreme volatility attract many traders.

The Japanese yen is a safe haven currency, so traders are attracting purchases of the currency. The Japanese yen is the most traded currency in Asia and the world.

The yen began to circulate in July 1871. The Meiji government officially adopted the yen in a bill signed on June 27, 1871. The Japanese yen is the third-largest trading currency after the US dollar and the Euro.

3. GBP/USD

In the best forex pairs to trade, GBP/USD is the third most popular currency pair. GBP/USD is shortened term of British Pound to US Dollar pair. Here, the pound sterling (GBP) is the base currency, and the US dollar (USD) is the quote currency.

Buying GBP/USD means buying pound sterling. If the GBP/USD exchange rate is 1.2500, it means that it needs 1.25 USD to buy 1 GBP.

It ranks third among the top 10 best currency pairs to trade, with a daily trading volume of 11%. If the British economy grows faster than the United States, the pound may appreciate against the dollar.

However, any better outcome in the US economy may strengthen the dollar against the pound. During the Great Recession between 2007 and 2008, sterling prices fluctuated dramatically due to global influence.

The GBP/USD currency pair is usually negatively correlated with USD/CHF and positively correlated with EUR/USD. This is due to the positive correlation between the Euro, Swiss Franc, and British Pound.

4. AUD/USD

AUD/USD is another best currency pair among the best forex pairs to trade. The AUD/USD is the shortened term for the Australian dollar against the US dollar pair. The Australian dollar is the base currency and the US dollar is the quote currency.

If the currency pair is trading at 0.6955, then we need 0.6955 USD to buy 1 AUD. However, the AUD/USD exchange rate may rise due to the strengthening of the Australian dollar or the weakening of the US dollar.

In the global foreign exchange trading volume, the AUD/USD trading volume is about 5%, ranking fourth among the top 10 best currency pairs to trade. Since Australia is an exporter, the Australian dollar fluctuates with the price of commodities such as iron ore and coal.

Falling commodity prices usually put pressure on the Australian dollar, and rising commodity prices make the Australian dollar stronger. The difference in interest rates between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) will also affect the value of these currencies.

5. USD/CAD

Among the best forex pairs to trade, the US dollar and the Canadian dollar are the most popular currency pairs. The USD/CAD is the shortened form of the US dollar against the Canadian dollar pair. The US dollar (USD) is the base currency, and the Canadian dollar (CAD) is the quote currency.

The USD/CAD pair indicates how many Canadian dollars are needed to purchase one dollar. Buying USD/CAD means buying the USD. If the transaction price of the USD/CAD pair is 1.3575, then we need 1.3575 CAD to buy 1 USD.

The USD/CAD is severely affected by the difference in interest rates between the Federal Reserve (Fed) and the Bank of Canada (BoC). The strength of the Canadian dollar is closely related to oil prices because oil is Canada’s main export commodity.

When the price of the USDCAD pair rises, this means that the value of the US dollar relative to the Canadian dollar is strengthening. USD/CAD ranks 4th among the top 10 best currency pairs to trade, its daily trading volume is 5%.

6.USD/CHF

The USD/CHF is another great pair among the top 10 best currency pairs to trade. USD/CHF is a shortened term for the US dollar against the Swiss Franc pair. Here, the US dollar (USD) is the base currency and the Swiss franc (CHF) is the quote currency.

The USD/CHF pair indicates how many Swiss francs are needed to buy 1 dollar. Buying USD/CHF means buying the USD. If the USD/CHF pair is trading at 0.9750, then we need 0.9750 CHF to buy 1 USD.

The USD/CHF is affected by employment data and gross domestic product (GDP) of the two countries, which are several economic indicators that have a significant impact on the currency pair. The USD/CHF is ranks 6th, with trading volume accounting for 5% of the daily trading volume.

7. NZD/USD

In the list of the top 10 best currency pairs to trade, NZD/USD is another popular currency pair. NZD/USD is the shortened form of the New Zealand dollar against the US dollar. New Zealand dollar (NZD) is the base currency, and the US dollar (USD) is the quote currency.

Buying NZD/USD means buying NZD. If the exchange rate of the New Zealand dollar to the US dollar is 0.6500, then we need 0.65 US dollars to buy 1 New Zealand dollar.

This is another currency pair with the largest trading volume, ranking seventh. New Zealand’s economy depends mainly on dairy products. Therefore, the price of NZD/USD changes with the global dairy industry price.

The price increase in the dairy industry will drive the price of New Zealand dollars against the US dollar. On the other hand, falling dairy prices have reduced bearish sentiment.
The US dollar and New Zealand dollar account for 4% of daily foreign exchange transactions. The New Zealand market is the first to open a new trading day.

8. EUR/JPY

EUR/JPY is the most popular currency pair, in the list of the top 10 best currency pairs to trade. The EUR/JPY is a short form of the Euro against the Japanese Yen pair. The euro (EUR) is the base currency, and the yen (JPY) is the quote currency.

The EUR/JPY pair indicates how much Japanese yen is required to purchase 1 Euro. Therefore, buying the EUR/JPY means buying the euro. If the transaction price of the EUR/JPY pair is 123.25, then we need 123.25 yen to buy 1 euro.

EUR/JPY is a very volatile currency pair therefore expert traders trade this currency pair. If traders follow trends and trade right direction then traders have a huge chance to make money from this currency pair. Among the top ten best currency pairs to trade, it ranks 8th, accounting for 4% of the daily trading volume.

9. GBP/JPY

The GBP/JPY is the most popular currency pair in the list of best forex pairs to trade. GBP/JPY is a short form of the British Pound to Japanese Yen. Pound sterling (GBP) is the base currency, and Japanese yen (JPY) is the quote currency. Buying GBP/JPY means buying GBP. If the trading price of the GBP/JPY pair is 141.25, then we need 141.25 yen to buy 1 pound.

Many traders trade this pair as it moves long-range with lots of pips. GBP/JPY ranks 9th, accounting for 4% of daily foreign exchange transactions.

10. EUR/GBP

The currency pair EUR/GBP is a short form for Euro to British Pound pair. Here, the Euro is the base currency, and the British Pound is the quote currency.

The currency pair EUR/GBP indicates how many pounds, it takes to buy 1 euro. If we buy EUR/GBP, we buy Euros. If the price of the currency pair transaction is 137.55, then we need 137.55 pounds to buy 1 euro.

The EUR/GBP ranked 10th, accounting for 3% of daily foreign exchange transactions. Higher volatility may be attractive to traders, but it is important to develop a risk management strategy before taking any position in a volatile market. In recent years, due to the uncertainty surrounding BREXIT, the currency pair’s volatility has become unpredictable.

Conclusion:

This does not mean that these pairs are necessarily your best choice for trading, but, as always, you must understand your trading strategies and plans.  Therefore, for various reasons, forex majors are the best forex pairs to trade. Traders should consider various factors, such as technical analysis, fundamental analysis, and other factors that affect these currency pairs.