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Sarah Parker

What are the main currency pairs in Forex?

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Hi, thank you for asking! 

Forex is a market that generates a revenue of over $4 trillion every day, as such it is the largest currency exchange market in the world, with high liquidity and constant price changes that may inflict losses, or bring a great profit to traders.

When it comes to currency pairs being traded in Forex, the main ones are:
EUR/USD – Euro Dollar
USD/JPY – Dollar Yen
GBP/USD – Pound Dollar
USD/CHF – Dollar Swiss Franc

The EUR/USD (Euro/US Dollar) nicknamed ‘Fiber’ is the world’s most traded currency pair commanding 23% of FX transactions in 2016. The Euro and the US Dollar represent the two largest economies in the world - the US Economy and the European Union.

The popularity of the EUR/USD ensures that it trades at tight spreads. High volumes lead to reduced price differences between the bid and offer.

The GBP/USD (Pound Sterling/US Dollar) is nicknamed ‘Cable’ due to the undersea cables that used to carry bid and ask quotes across the Atlantic Ocean. This major forex pair shares similarities with the EUR/USD. 

Both are highly correlated because the United Kingdom’s economy is tied to the European Union. Traders enjoy tight bid-ask spreads on the GBP/USD due to its high liquidity.

In addition to these main pairs, there are also commodity currency pairs (AUD/USD, USD/CAD, NZD/USD), whose value is heavily linked with the value of commodities.

And there are cross pairs which don’t include the US dollars, and these are usually between countries whose economies are heavily intertwined (EUR/GBP, EUR/JPY, EUR/CHF).
 

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