Major forex pairs are the most traded currency pairs in the forex market, consisting of the US dollar (USD) paired with another major currency, such as the euro (EUR). These pairs are known for their high liquidity, tight spreads, and predictable price movements, making them ideal for traders at all levels. Our article will provide a clear and practical guide to understanding and trading major forex pairs effectively.
Overview of the Top Major Currency Pairs:
Each major currency pair has unique characteristics that influence how it trades. This section will cover the trading volume, volatility, costs, and best times to trade for the most popular pairs. You’ll also learn what drives their price movements, making it easier to decide which pairs suit your trading strategy.
1. EUR/USD
The EUR/USD is the most traded major currency pair in the forex market, consistently topping charts with the highest trading volume. Representing the exchange rate between the euro and the US dollar, this pair reflects the economic relationship between two of the largest economies in the world: the Eurozone and the United States.
One of the key reasons for its popularity is its high liquidity. This ensures tight spreads, fast order execution, and relatively stable price movements, making it a top choice for traders at all levels. The EUR/USD often shows trends that are easier to analyze compared to less liquid pairs, which is why it’s commonly used in strategies like trend-following and range trading.
The major currency pair reacts strongly to economic data releases from both regions, such as interest rate decisions from the European Central Bank (ECB) and the Federal Reserve (Fed), non-farm payroll reports, inflation numbers, and GDP data. Traders closely monitor these events as they often trigger significant price movements.
The best time to trade the EUR/USD is during the overlap of the London and New York trading sessions, where liquidity and volatility are at their highest. This timing provides trading opportunities, especially for short-term traders looking to capitalize on intraday price fluctuations.
| Specification | Details |
|---|---|
| Volume | $2.2 trillion/day |
| Daily Volatility | 81 Pips |
| Leverage | Up to 30:1 (ESMA/EU, ASIC, South Africa), Up to 50:1 (US), 1:500 or more for offshore jurisdictions (New Zealand, Seychelles) |
| Average Cost to Trade | 0.6 pips (6 points) or 0.0 pip spread account available with ~$3 commission per side |
| Best Time to Trade | 13:00-16:00 GMT (Europe-New York overlap) |
2. USD/JPY
The USD/JPY is often called a “barometer of risk sentiment” because of how closely it tracks investor confidence. The Japanese yen, a safe-haven currency, tends to strengthen during periods of market uncertainty and weaken when global risk increases.
This major currency pair is highly liquid, especially during the Tokyo trading session, and responds strongly to monetary policy decisions from the Bank of Japan (BoJ) and the Federal Reserve. However, the yen’s ultra-low interest rates often create opportunities for carry trades, where traders borrow in yen to invest in higher-yielding assets, impacting the pair’s long-term trends.
Geopolitical events in Asia involving China or North Korea also influence USD/JPY movements. Traders monitoring this major pair must keep an eye on global risk events and shifts in monetary policy expectations. The USD/JPY appeals to traders who thrive on volatility due to the sharp and reactive price swings.
| Specification | Details |
|---|---|
| Volume | $2.2 trillion/day |
| Daily Volatility | 123 Pips |
| Leverage | Up to 30:1 (ESMA/EU, ASIC, South Africa), Up to 50:1 (US), 1:500 or more for offshore jurisdictions (New Zealand, Seychelles) |
| Average Cost to Trade | 1.4 pips (14 points) or 0.0 pip spread account available with ~$3 commission per side |
| Best Time to Trade | 23:00-08:00 GMT (Tokyo-New York overlap) |
3. GBP/USD
The GBP/USD forex pair is known for its unpredictable behavior and is often referred to as “Cable” due to its historic trading connection between London and New York via transatlantic cables. This major pair is great for its high volatility, which can create opportunities for traders.
However, unlike some major pairs with relatively stable price movements, GBP/USD frequently experiences sharp spikes and reversals. These swings are driven by economic announcements from the UK, such as inflation reports or employment data, as well as political developments like Brexit or Scottish independence discussions. On the US side, Federal Reserve policies and broader global sentiment play a critical role in impacting the major currency pair.
GBP/USD traders must adapt quickly, as the pair often breaks technical levels without warning. Those who predict its volatility may find lucrative trading opportunities, especially during the overlap of London and New York.
| Specification | Details |
|---|---|
| Volume | $0.75 trillion/day |
| Daily Volatility | 109 Pips |
| Leverage | Up to 30:1 (ESMA/EU, ASIC, South Africa), Up to 50:1 (US), 1:500 or more for offshore jurisdictions (New Zealand, Seychelles) |
| Average Cost to Trade | 1.7 pips (17 points) or 0.0 pip spread account available with ~$3 commission per side |
| Best Time to Trade | 13:00-16:00 GMT (London-New York overlap) |
4. USD/CAD
The USD/CAD major currency pair is heavily influenced by commodity markets, like oil, given Canada’s reliance on crude exports. When oil prices rise, the Canadian dollar (CAD) tends to strengthen, pushing USD/CAD lower. Conversely, falling oil prices often weaken the CAD, making this pair a viable option for traders who understand commodity cycles.
This major currency pair is also shaped by economic divergence between the US and Canada. For example, differences in employment data, interest rate policies, or GDP growth can lead to significant shifts in the pair’s trajectory.
Compared to GBP/USD, the USD/CAD is known for its steadier price movements, making it ideal for traders who prefer a less volatile trading environment. The major currency pair is most active during the New York and London sessions, as traders from both continents are actively participating in the market.
| Specification | Details |
|---|---|
| Volume | $0.35 trillion/day |
| Daily Volatility | 86 Pips |
| Leverage | Up to 30:1 (ESMA/EU, ASIC, South Africa), Up to 50:1 (US), 1:500 or more for offshore jurisdictions (New Zealand, Seychelles) |
| Average Cost to Trade | 2.0 pips (20 points) or 0.0 pip spread account available with ~$3 commission per side |
| Best Time to Trade | 12:00-16:00 GMT (London-New York overlap) |
5. USD/CHF
The USD/CHF major forex pair is often called a “safe-haven pair,” as the Swiss franc (CHF) is viewed as a stable store of value during times of high volatility. Switzerland’s reputation for political neutrality and a robust financial system supports this status, leading to demand for the franc in uncertain times.
Movements in the USD/CHF are less about local Swiss economic data and more about global market sentiment. For instance, when markets are risk-averse, the CHF tends to appreciate, driving the pair lower. On the other hand, during times of optimism, the USD typically strengthens as riskier assets regain favor.
Despite its safe-haven reputation, USD/CHF can occasionally exhibit sharp, unexpected price moves due to interventions by the Swiss National Bank (SNB). Traders must stay vigilant when trading this major currency pair, as the SNB has historically acted to curb excessive franc strength.
| Specification | Details |
|---|---|
| Volume | $0.30 trillion/day |
| Daily Volatility | 71 Pips |
| Leverage | Up to 30:1 (ESMA/EU, ASIC, South Africa), Up to 50:1 (US), 1:500 or more for offshore jurisdictions (New Zealand, Seychelles) |
| Average Cost to Trade | 1.5 pips (15 points) or 0.0 pip spread account available with ~$3 commission per side |
| Best Time to Trade | 07:00–10:00 GMT (Early European session) and 13:30–15:00 GMT (London-New York overlap) |
6. AUD/USD
The AUD/USD major forex pair is closely tied to the performance of the global commodity market. Australia’s economy is heavily reliant on exports of natural resources, such as gold and iron ore, making this pair highly sensitive to fluctuations in commodity prices. Setting price alerts on these commodities is ideal as it helps anticipate future price movements of AUD/USD.
What differentiates AUD/USD from other major trading pairs is its correlation with the Chinese economy. As China is Australia’s largest trading partner, data such as Chinese manufacturing output or trade balance reports can significantly impact the pair.
Moreover, the AUD/USD often shows pronounced trends, making it perfect for trend-following traders. However, its price can also be highly volatile, reacting sharply to Reserve Bank of Australia (RBA) decisions or unexpected changes in commodity prices. The major forex pair is most active during the Asian session, providing a good opportunity for traders seeking activity outside of European and US trading hours.
| Specification | Details |
|---|---|
| Volume | $0.25 trillion/day |
| Daily Volatility | 73 Pips |
| Leverage | Up to 30:1 (ESMA/EU, ASIC, South Africa), Up to 50:1 (US), 1:500 or more for offshore jurisdictions (New Zealand, Seychelles) |
| Average Cost to Trade | 2.0 pips (20 points) or 0.0 pip spread account available with ~$3 commission per side |
| Best Time to Trade | 19:00–04:30 GMT (Asian session, including Sydney-Tokyo overlap) |
Which Factors Are Influencing the Prices of Major Currency Pairs?
Forex prices are influenced by a mix of global events, market conditions, and economic data. Every movement reflects changes in economic stability, central bank policies, or shifts in trader sentiment. Knowing the key factors behind these changes can give traders a clear edge and make predicting future prices easier. Below are some of the significant drivers of currency prices:
- Central Bank Decisions
- Economic Data Releases
- Political Events
- Global Trade Dynamics
- Natural Disasters or Crises
- Seasonal Trends
- Market Speculation
- Government Currency Interventions
Central Bank Decisions
When central banks like the Federal Reserve or the European Central Bank announce changes to interest rates or monetary policies, the forex market reacts quickly. A rate hike can increase demand for a currency, as it offers better returns to investors. On the other hand, rate cuts or quantitative easing measures often weaken a currency. Therefore, marking your economic calendar for the date when these announcements are made is a priority to stay on top of the market.
Economic Data Releases
Key reports such as employment numbers, GDP growth, and inflation rates provide a snapshot of a country’s economic health. Positive data, like strong job creation or rising GDP, often boosts a currency’s value as it signals a strong economy. Unexpected results, like disappointing job numbers or higher-than-expected inflation, can cause sharp and immediate price shifts in currency pairs.
Political Events
Elections, government changes, or geopolitical tensions often create volatility in the forex market. Stable political environments strengthen a currency by attracting investors, while instability or uncertainty can lead to losses. A prime example was the prolonged impact of Brexit negotiations on the British pound, where every new development caused dramatic market swings.
Global Trade Dynamics
The balance of trade plays a critical role in currency valuation. Countries with trade surpluses, like Japan or Germany, often see their currencies appreciate due to high demand from foreign buyers. Conversely, trade deficits or disruptions, such as the US-China trade war, can weaken currencies tied to those economies by reducing investor confidence.
Natural Disasters or Crises
Natural disasters, pandemics, or other crises can have an immediate and sometimes long-lasting impact on a country’s currency. For example, during the early months of the COVID-19 pandemic, currencies like the Australian dollar and Canadian dollar dropped sharply due to uncertainty and economic disruption. Such events disrupt trade, hurt investor confidence, and weaken currencies tied to the affected economies.
Seasonal Trends
Certain currencies show seasonal behavior based on economic cycles. The Canadian dollar often strengthens in winter, driven by energy exports like oil and gas. Similarly, the Australian dollar fluctuates during key mining seasons as commodity exports respond to global demand shifts.
Market Speculation
Market speculation can amplify price movements, especially when large traders or institutions take significant positions. Anticipation of Federal Reserve rate hikes, for instance, can lead to speculative buying of the US dollar, pushing its value higher even before official announcements. Speculation adds a layer of volatility to currency prices.
Government Currency Interventions
Occasionally, governments or central banks intervene in the forex market to stabilize their currencies. The Swiss National Bank, for example, has intervened to weaken the Swiss franc to support Switzerland’s export economy. Such moves often cause sharp, unexpected price swings in pairs like USD/CHF.
Just a current thing with the forex major pair USD/JPY and the Bank of Japan.
How to Trade Major Forex Pairs
Trading major forex pairs requires a structured approach that combines preparation, analysis, and risk management. Here’s a practical, step-by-step guide that takes you from registration to placing your first position.
Step 1: Sign Up with a Reliable Broker
The first step is choosing a broker you can trust. At WR Trading we recommend using Vantage, FP Markets, or BlackBull Markets, which are known for competitive pricing, fast execution, and regulated operations. Head to the Forex broker’s website, create an account, and complete the registration by providing your details and verifying your identity. This process is straightforward and usually takes less than an hour.
Step 2: Fund Your Trading Account
Once your account is approved, add funds. Brokers accept deposits via bank transfers, credit/debit cards, or e-wallets. Start with a manageable amount that fits your budget. Many brokers also have minimum deposit requirements, so check these in advance.
Step 3: Download and Set Up the Trading Platform
After funding your account, download the broker’s trading platform, like MetaTrader 4 (MT4), MetaTrader 5 (MT5), or a proprietary platform. These tools are where you’ll analyze markets, place trades, and monitor performance. Log in with your broker credentials, explore the interface, and ensure you understand how to navigate the features before moving forward.
Step 4: Practice with a Demo Account
A demo account is the perfect training ground for new traders. It lets you explore the platform and practice trades with virtual money. Spend some time experimenting with features like order types, chart tools, and indicators. The goal here is to build confidence before using real money. Treat it seriously – your demo performance sets the stage for live trading.
Step 5: Combine Fundamental and Technical Analysis
Trading major pairs requires an understanding of the factors driving price movements. Use fundamental analysis to monitor key events like interest rate changes, GDP reports, and employment data. Pair this with technical analysis by applying tools such as moving averages and support/resistance levels to identify precise entry and exit points.
Step 6: Choose the Right Pair and Timing
When selecting a currency pair, start with those you understand or that align with your trading hours or strategy. Major pairs are often the best choice due to their high liquidity and tighter spreads. Timing matters also, trade when the market is most active, such as the London-New York overlap or the Asian session, depending on the pair.
Step 7: Set Up Your First Trade
Here’s how to place your first trade:
- Open the trading platform and select the currency pair you want to trade.
- Enter the lot size to set how much you want to trade.
- Set a stop-loss to automatically close the trade if the price moves too much against you.
- Set a take-profit to lock in your desired profit when the price reaches your target. You can also set multiple take-profit positions.
- Choose a market order (executes immediately) or a limit order (this option is ideal as it allows you to set your own prices).
- Click “Buy” if you expect the price to rise or “Sell” if you expect it to fall.
- Double-check all your details, then confirm the trade.
Step 8: Monitor and Manage Your Trade
Once your trade is open, keep an eye on its performance. Watch how the price moves relative to your stop-loss and take-profit levels, but avoid making impulsive adjustments. Stick to your plan unless market conditions change significantly.
After the trade is closed, review the outcome. Was your analysis accurate? Did your risk management hold up? Use this feedback to refine your approach for future trades. Every trade is an opportunity to grow as a trader.
What Are the Advantages of Trading Major Forex Pairs?
Major forex pairs, such as EUR/USD, USD/JPY, and GBP/USD, dominate the forex market because they offer traders unique benefits, including high liquidity, low costs, and abundant resources for analysis. Here are the main advantages explained in detail:
- High Liquidity
- Lower Transaction Costs
- Stability in Market Movements
- Access to Abundant Information
- Strong Correlation with Global Economies
- High Volatility During Key Sessions
- Availability Across All Brokers
High Liquidity
Major forex pairs are traded in large volumes, making them the most liquid assets in the market. High liquidity ensures tighter spreads, faster execution, and less risk of slippage. This creates a smoother trading experience, especially during peak market hours.
Lower Transaction Costs
Brokers offer lower spreads and commissions for major pairs compared to exotic or minor pairs. For example, EUR/USD often has a spread as low as 0.5 pips on many platforms, making it cost-effective to trade. Also, some brokers will have spread free accounts further decreasing the fees.
Stability in Market Movements
Major pairs tend to move more predictably compared to less liquid or exotic pairs. This stability makes it easier for traders to identify trends and apply technical analysis effectively, reducing the guesswork involved in trading.
Access to Abundant Information
Economic data, news, and analysis for major pairs are widely available. Traders can easily access forecasts, updates, and historical performance data, making it simpler to stay informed and make better trading decisions.
Strong Correlation with Global Economies
Major pairs reflect the performance of the world’s largest economies, such as the US, Eurozone, and Japan. This connection makes it easier to analyze price movements based on global economic trends and events.
High Volatility During Key Sessions
Major pairs often experience predictable volatility during overlapping market sessions, like the London-New York overlap. This volatility creates opportunities for significant profits, especially for traders who thrive in active markets.
Availability Across All Brokers
Unlike exotic pairs, which may not be available on all platforms, major pairs are offered by every forex broker, such as Vantage, FP Markets, and BlackBull. This accessibility allows traders to choose brokers based on features like spreads and execution speed without worrying about pair availability.
Major vs Minor vs Exotic Currency Pairs – What Is the Difference?
Currency pairs are classified into three categories: major, minor, and exotic currency pairs. Each group offers distinct characteristics that impact liquidity, volatility, and trading costs. Here’s a breakdown of the differences between these categories:
| Specification | Major Pairs | Minor Pairs | Exotic Pairs |
|---|---|---|---|
| Liquidity | High | High | Lowest |
| Volatility | Predictable | Moderate | High |
| Spread | Tight (0.5–2 pips) | Slightly wider (1–5 pips) | Wide (2+ pips) |
| Market Accessibility | Widely available | Available on most platforms | Limited availability |
| Risk Level | Low to moderate | Low to moderate | High |
| Trading Cost | Lowest | Moderate | High |
| Examples | EUR/USD and GBP/USD | EUR/GBP and CAD/JPY | USD/TRY and EUR/ZAR |
What Are Commodities Currency Pairs?
Commodity currency pairs are currencies from countries that rely heavily on exporting natural resources like oil, gold, or agricultural products. Examples include AUD/USD, influenced by Australia’s gold and iron ore exports, and USD/CAD, which is tied to Canada’s oil industry. These currencies often move in tandem with commodity prices, so when oil prices rise, the Canadian dollar strengthens, pushing USD/CAD lower. Similarly, higher gold prices can boost the Australian dollar, making AUD/USD more valuable.
These pairs attract traders due to their potential for sharp price movements, creating opportunities for profit. However, this volatility comes with risks, as commodity prices are often impacted by unpredictable factors like geopolitical tensions or extreme weather.
Therefore, it’s important to understand both global commodity trends and how they affect the economies of exporting nations to trade these pairs successfully.
Learn to Trade Major Forex Pairs With WR Trading Mentoring
Those starting their forex trading journey can benefit greatly from a structured course, and WR Trading Mentoring offers a focused approach to mastering major currency pairs. Instead of relying on trial and error, the program provides step-by-step training that covers everything from understanding market dynamics to executing trades confidently.
The mentoring sessions are designed to build foundational skills like risk management, technical analysis, and strategic planning. You’ll be given access to weekly webinars hosted by profitable traders where you can learn exclusive tips that you can apply on forex. Also, there is low time commitment as the course only requires 1 to 3 hours of trading per day.
Conclusion: Major Forex Pairs Are Good Assets to Trade
Major forex pairs are good assets to trade because they provide high liquidity, tight spreads, and predictable price movements. They allow traders to execute trades quickly and apply both fundamental and technical analysis effectively. Lower transaction costs and reliable market access make them practical choices for traders at all levels.
These pairs also benefit from a wealth of information and data, enabling traders to make well-informed decisions. Therefore, short-term strategies or longer-term positions are viable when trading any major pair.
Frequently Asked Questions:
What Are Major Forex Pairs?
Major forex pairs are currency pairs that include the US dollar and one of the other most-traded global currencies, such as EUR/USD, USD/JPY, or GBP/USD. These pairs dominate the forex market due to their high trading volume and tight spreads.
Why Are Major Forex Pairs Popular Among Traders?
They are popular because of their high trading volumes, which lead to tighter spreads and reduced trading costs. Major pairs also respond predictably to global economic events, making them easier to analyze. Also, their availability on all forex trading platforms ensures access for all traders.
How Do I Choose a Major Forex Pair to Trade?
The best pair depends on your trading style and market knowledge. Consider pairs that match the times you plan to trade, such as EUR/USD during the London-New York session overlap. Choose pairs you can analyze confidently using economic and technical data.
What Time Is Best for Trading Major Forex Pairs?
The best time to trade forex is during periods of high liquidity and activity, such as the London-New York session overlap (12:00–16:00 GMT). This ensures tighter spreads and more consistent price movements. Each forex pair will have a preferred time to trade as volume picks up, so ensure you choose the correct time frame for your chosen currency pair.
Are Major Forex Pairs Suitable for Beginners?
Yes, major pairs are ideal for beginners because of their stability and predictability. Their high liquidity ensures smooth trade execution, and the abundance of resources makes them easier to analyze. Beginners can start with these pairs and trade using a demo account before trading with real money.
