What are the Top 5 Currency Pairs to Trade?
FX. Forex. Foreign Exchange. Whatever you call it – it’s a vital piece of the financial puzzle used every day around the globe.
We have all changed money up at the post office. Bought some Euros for your Spanish holiday. Picked up some Dollars for your trip to Disney! Well, if you realised it or not – you have participated in the largest and most liquid financial market in the world today.
Foreign exchange is the exchange of one currency for another. Think of it as converting one currency INTO another. Latest estimates put the daily volume of FX deals transacted to be around $7 Trillion!
We wont go into too much detail in this article regarding the ins and outs of forex trading – However if you would like to learn more (and there is a lot to learn!) please click the link below for our forex trading guide! Now lets take a look at the top 5 currency pairs to trade:
Top 5 currency pairs to trade: The big 5!
You may have heard of The Big 5 whilst on safari. But were talking about something completely different (And hopefully more exciting!)
We are going to talk you through the top 5 currency pairs traded every year by sheer volume. The more volume a currency pair receives, the more liquid the currency pair is said to be. Lets go!
1 – Euros VS US Dollars / EURUSD (Fiber)
First in our list of top 5 currency pairs is EURUSD. EURUSD is said to be the most liquid and most traded currency pair in the world. Up to 25% of annual FX trades are made up of EURUSD trades alone!
Why is EURUSD the most traded currency pair you might ask? The answer is relatively simple. You’re dealing with the worlds 2 largest economies in a single currency pair!
Some of the large market releases that can have an impact on this currency pair are European and US GDP figures and more importantly the setting of interest rates by the corresponding Central Banks. Rates tend to rise if a central bank raises its interest rate. Therefore if the ECB raised their interest rates on a given day – it’s likely that the value of Euros would rise against the price of USD.
We will insert a weekly chart of each of our top 5 currency pair picks below each written section to give you an idea of how each currency pair has performed over the last few years. Take a few minutes to make comparison and also look for correlations and patterns between the currency pairs:
If we take a closer look at some price points from January 2017 we can see the following:
- The low in EURUSD was down at 1.0342
- The high in EURUSD was up at 1.2556
- During this period EURUSD has seen a rise of around 13.2%
2 – US Dollars VS Japanese JPY / USDJPY (Gopher)
Number 2 and were venturing over to an APAC country – Japan, in our list of top 5 currency pairs to trade. Trade volume here is some 10% lower than EURUSD at number 1.
As USD is the base currency in this FX pair – This pairs tends to be correlated with other USD based pairs such as USDCHF and USDCAD.
The central bank that sets the JPY rates is the Bank of Japan and again this coupled with the FED in the states would be one of the driving factors of this currency pair.
How does USDJPY get to our number 2 spot? Simply because you are dealing with the most traded currency in USD and the most commonly traded currency in Asia, in JPY!
Heres the USDJPY chart:
If we take a closer look at some price points from January 2017 we can see the following:
- The low in USDJPY was down at 101.18
- The high in USDJPY was up at 118.61
- During this period USDJPY has seen a decrease of around 6.8%
3 – GBP VS USD / GBPUSD (Cable)
Coming in at number 3 in our list of top 5 currency pairs to trade is GBPUSD or ‘Cable’ – So called because of when transactions between £ and $ were made via transatlantic cable. The world has moved on a fair bit since but the name has stuck!
Again, GDP and Central bank interest rate decisions are some of the largest factors in price action in this currency pair. Lets not talk about one of the biggest market movers in recent years… Brexit!
We’re dropping down into around a 10% share of volume for this currency pair and the name of the central banks setting the interest rates here are The Bank of England and The Federal Reserve.
GBPUSD/Cable chart:
If we take a closer look at some price points from January 2017 we can see the following:
- The low in GBPUSD was down at 1.1409
- The high in GBPUSD was up at 1.4379
- During this period GBPUSD has seen a rise of around 12.4%
EURUSD, GBPUSD and USDJPY was all you needed? Click here to open your account today!
4 – Australian Dollars Vs US Dollars (Aussie)
Next in our list of top 5 currency pairs to trade, were heading over to the largest Country in Oceania next – Australia. The RBA set the interest rates for the Australian dollar and as we’ve already encountered, the FED set the rates for the US Dollar.
A lot of the price action in this currency is attributed to Australia’s Export Industry. Australia’s largest exports are its coal and its Iron Ore which together account for around 30% of all its exports.
Because of its relationship with its largest exported products, the Aussie dollar is considered a ‘commodity currency’. Other commodity currencies are NZDUSD and USDCAD – which bring us onto our next section nicely…
If we take a closer look at some price points from January 2017 we can see the following:
- The low in AUDUSD was down at 0.5507
- The high in AUDUSD was up at 0.8136
- During this period AUDUSD has seen a rise of around 7.2%
5 – US Dollars Vs Canadian Dollars (Loonie)
Last but certainly not least in our list of top 5 currency pairs to trade (especially when compared to the plethora of other currency pairs out there) we have the ‘Loonie’! USDCAD.
As mentioned in the AUDUSD section, USDCAD is a commodity currency. The commodity in question here is oil and the price of USDCAD is heavily linked with oil pricing and oil based news releases.
The Central Bank setting the interest rates is unsurprisingly… The Bank of Canada and of course, the FED on the US side once again. We have also dropped down to around a 5% share in trading volume with USDCAD.
Quickly going back to the price of oil – As it is priced in USD, Canada is able to create a sizeable supply of USD though its Oil exports. Therefore, if we see a spike in oil prices – You should also see the price of the Canadian Dollar spike alongside it and also against USD (And vice versa of course)
Heres our USDCAD Chart:
If we take a closer look at some price points from January 2017 we can see the following:
- The low in USDCAD was down at 1.2060
- The high in USDCAD was up at 1.4669
- During this period USDCAD has seen a decrease of around 6.9%
Those are our ‘Top 5 Currency Pairs to Trade’!
Top 5 Currency Pairs Data
We’ve also provided a quick reference table to the top 5 currency pairs to trade here:
| Currency Pair | Low Price | High Price | % Change |
| EURUSD | 1.0342 | 1.2556 | 13.2% |
| GBPUSD | 1.1409 | 1.4379 | 12.4% |
| USDJPY | 101.18 | 118.61 | -6.8% |
| USDCAD | 1.206 | 1.4669 | -6.9% |
| AUDUSD | 0.5507 | 0.8136 | 7.2% |
Top 5 Currency Pairs to Trade: Final Thoughts
- EURUSD is the most liquid and most commonly traded currency pair in the world
- The more liquid a currency pair – the tighter the spread should be
- Some of the biggest factors in a currency pairs price action are GDP releases and Central Bank interest rate decisions
- Commodity currency pairs have their prices linked to the export of their countries commodities such as oil or metals
For more in-depth charting, please take a look at the window below:
If you would like to put your newfound knowledge of top currency pairs to the test – please click here or the link below to open an account today!
