In this guide, we will cover the 10 most volatile currency pairs as of late 2024. We will also explore the key factors driving volatility in the forex market, the major implications of high volatility, and the crucial risks and benefits you need to be aware of when trading these highly volatile pairs.
Most Volatile Forex Pairs: A Comprehensive Look
Here’s a detailed breakdown of the ten most volatile currency pairs in the Forex market:
1. USD/RUB
First, the most volatile currency pair in 2024 is the US Dollar-Russian Ruble pair, with an average monthly volatility change of 72,893 pips over the year.
Here are the major factors influencing the USD/RUB pair:
| USD/RUB | |
|---|---|
| Geopolitical Environment | Further sanctions imposed on Russia can further weaken the ruble against the US dollar |
| Oil Prices | The Russian economy relies heavily on its oil exports. Hence, demand for Russian oil impacts the strength of the ruble |
| Interest Rate | The changes in central bank rate policies between the US and Russia |
2. USD/ZAR
The second most volatile currency pair in 2024 is the US Dollar-South African Rand pair, with an average monthly volatility change of 58,665 pips over the year.
Here are the major factors influencing the USD/ZAR pair:
| USD/ZAR | |
|---|---|
| Geopolitical Environment | The unstable political and economic landscape in South Africa, especially in contrast with the US |
| Commodity Prices | South Africa is a major exporter of gold, platinum, and palladium—major fluctuations affect the strength of ZAR. |
| Interest Rate | The changes in central bank rate policies between the US and South Africa |
3. USD/THB
The third most volatile currency pair in 2024 is the US Dollar-Thai Baht pair, with an average monthly volatility change of 38,230 pips over the year.
Here are the major factors influencing the USD/THB pair:
| USD/THB | |
|---|---|
| Thailand’s Economic Landscape | Thailand is highly reliant on tourism, and any disruption affects its economy and its currency’s strength |
| Oil Prices | Thailand is a net oil importer, making the THB sensitive to fluctuations in global oil prices |
| Interest Rate | The changes in central bank rate policies between the US and Thailand |
4. EUR/SEK
The fourth most volatile currency pair in 2024 is the Euro-Swedish Krona pair, with an average monthly volatility change of 33,375 pips over the year.
Here are the major factors influencing the EUR/SEK pair:
| EUR/SEK | |
|---|---|
| Sweden’s Economic Landscape | As an export-driven economy, demand for Sweden’s key industries, such as automotive, impacts the strength of SEK |
| Eurozone Economic Data | The overall growth and inflation data from Eurozone countries strengthen or weaken the EUR against SEK |
| Interest Rate | The changes in central bank rate policies between the EU and Sweden |
5. GBP/TRY
The fifth most volatile currency pair in 2024 is the British Pound-Turkish Lira pair, with an average monthly volatility change of 18,981 pips over the year.
Here are the major factors influencing the GBP/TRY pair:
| GBP/TRY | |
|---|---|
| Turkey’s Economic Landscape | Turkey has a long history of high inflation, often reaching double digits—weakening the lira and making it unstable |
| Commodity Prices | As a major net energy importer, Turkey is vulnerable to fluctuations in oil and gas prices |
| Interest Rate | The changes in central bank rate policies between the UK and Turkey |
6. EUR/TRY
The sixth most volatile currency pair in 2024 is the Euro-Turkish Lira pair, with an average monthly volatility change of 15,202 pips over the year.
Here are the major factors influencing the EUR/TRY pair:
| EUR/TRY | |
|---|---|
| Turkey’s Economic Landscape | Again, Turkey’s high inflation weakens the lira and makes it highly unstable against its counterpart currencies |
| Eurozone Economic Data | The overall growth and inflation data from Eurozone countries strengthen or weaken the EUR against TRY |
| Interest Rate | The changes in central bank rate policies between the EU and Turkey |
7. GBP/MXN
The seventh most volatile currency pair in 2024 is the British Pound-Mexican Peso pair, with an average monthly volatility change of 13,713 pips over the year.
Here are the major factors influencing the GBP/MXN pair:
| GBP/MXN | |
|---|---|
| Commodity Prices | Mexico is a major exporter of oil and silver. Hence, fluctuations in global commodity prices, especially oil, affect the MXN’s strength against its counterpart currency. |
| Mexico’s Geopolitical Landscape | Mexico routinely has significant shifts in its political atmosphere that also affect its economic policy and its currency’s sentiment. |
| Interest Rate | The changes in central bank rate policies between the UK and Mexico |
8. USD/SEK
The eighth most volatile currency pair in 2024 is the US Dollar-Swedish Krona pair, with an average monthly volatility change of 12,654 pips over the year.
Here are the major factors influencing the USD/SEK pair:
| USD/SEK | |
|---|---|
| Sweden’s Economic Performance | As an export-driven economy, demand for Sweden’s key industries, such as automotive, impacts the strength of SEK |
| Oil Prices | Sweden is a major energy importer, and its industries are highly sensitive to energy prices fluctuations |
| Interest Rate | The changes in central bank rate policies between the US and Sweden |
9. USD/MXN
The ninth most volatile currency pair in 2024 is the US Dollar-Mexican Peso pair, with an average monthly volatility change of 11,282 pips over the year.
Here are the major factors influencing the USD/MXN pair:
| USD/MXN | |
|---|---|
| Commodity Prices | Mexico is a major exporter of oil and silver. Hence, fluctuations in global commodity prices, especially oil, affect the MXN’s strength against its counterpart currency. |
| Mexico’s Geopolitical Landscape | Mexico routinely has significant shifts in its political atmosphere that also affect its economic policy and its currency’s sentiment. |
| Interest Rate | The changes in central bank rate policies between the US and Mexico |
10. EUR/MXN
The tenth most volatile currency pair in 2024 is the Euro-Mexican Peso pair, with an average monthly volatility change of 10,707 pips over the year.
Here are the major factors influencing the EUR/MXN pair:
| EUR/MXN | |
|---|---|
| Commodity Prices | As a major exporter of oil and silver, fluctuations in global commodity prices, especially oil, affect the MXN’s strength against its counterpart currency. |
| Eurozone Economic Data | The overall growth and inflation data from Eurozone countries strengthen or weaken the EUR against MXN |
| Interest Rate | The changes in central bank rate policies between the EU and Mexico |
Main Factors Influencing Volatility in the Forex Market
The following are the key factors that influence the volatility of forex pairs:
1. Economic Data Releases
First, specific economic data releases from one or both countries impact the strength of a country’s currency against its counterparts. These key economic data include a country’s Gross Domestic Product (GDP), inflation rate, and trade balance (exports and imports).
All else being equal, positive economic data strengthens a country’s currency against its counterparts, while negative data weakens it. Upon the release of key economic data, volatility tends to increase as the market “prices in” this new information.
2. Central Bank Policies
Second, central bank policy announcements from one or both countries increase volatility and impact the strength of a country’s currency against its counterparts. Arguably, the most important policy change is with regard to the country’s interest rate.
Generally speaking, all else being equal, a country’s currency strengthens against its counterpart when its central bank raises interest rates (tightening monetary policy) and weakens when the central bank lowers interest rates (expansionary monetary policy).
3. Geopolitical Events
Third, global and local uncertainty or instability—such as local elections, conflicts, or specific sanctions against a country—can raise the volatility of specific currency pairs, both directly and indirectly.
For example, one of the most volatile currency pairs is the USD/RUB, where the ongoing conflict in Ukraine and the instability of Russian oil demand negatively affect the ruble against its counterparts, in this case, the US dollar. Also, during periods of global geopolitical tensions, safe-haven currencies tend to perform better relative to their counterparts.
4. Market Sentiment
Fourth, shifting market sentiment can also increase volatility in specific currency pairs. Generally speaking, during a bullish market environment, the currencies of emerging (growth) markets tend to strengthen. In contrast, safe-haven currencies (like the Swiss Franc and Japanese Yen) tend to perform better against their counterparts during bearish market environments or even periods of heightened uncertainty in the overall global economy.
5. Commodity Prices
Fifth, countries reliant on commodity exports (e.g., Canada, Australia, and Russia) tend to experience increased currency volatility during significant fluctuations in commodity prices, such as oil and precious metals in the world market.
Generally speaking, the currencies of these countries tend to get stronger against their counterparts during periods of rising commodity prices and weaken during periods of falling commodity prices.
6. Time of Day
Finally, the specific time of the day also affects the volatility level of forex pairs. This is because volatility normally goes up during periods of high liquidity in the market (caused by increased trading activity).
Generally speaking, volatility is higher between 8 AM and 12 PM Eastern Standard Time (EST), as liquidity in the forex market becomes elevated during this period. In contrast, volatility tends to be lower after this period as liquidity returns to normal levels.
What can happen due to high volatility in the Forex market?
During periods of high volatility, forex pairs tend to experience larger price swings in both directions. In other words, price fluctuations are more pronounced and more frequent. Hence, if you’re trading a currency pair with high volatility, you need to be ready for the rapid and often unpredictable price movements.
Risks and Benefits of Trading High-Volatility Forex Pairs
The following are the key risks and benefits you need to be aware of when trading high-volatility forex pairs:
Pros
- Potential for More Trading Opportunities
- Ideal for Scalping and Day Trading
- Increased Liquidity
- Potential Outperformance
- Strong Breakout Potential
Cons
- Wider Spreads
- Unstable Price Movement
- Challenging Risk Management
- Can Lead to Emotional Trading
- Increased False Signals
Key Risks:
- Wider Spreads – High-volatility pairs often have larger spreads, leading to higher transaction costs overall.
- Unstable Price Movement – High-volatility pairs experience erratic price movement in both directions.
- Challenging Risk Management – Generally, using a tight stop-loss on high-volatility pairs is unwise—as prices tend to have larger swings, potentially triggering your stop-loss prematurely.
- Can Lead to Emotional Trading – Due to the rapid changes in price, beginner traders may be susceptible to emotional decision-making and overtrade.
- Increased False Signals – In high volatility environments, there is an increased likelihood of price action and technical indicators generating false signals.
Key Benefits:
- Potential for More Trading Opportunities – High-volatility trading environments naturally present more opportunities across multiple time frames.
- Ideal for Scalping and Day Trading – Scalpers and day traders can often capitalize on large intraday price swings. This is especially the case for more experienced and advanced traders.
- Increased Liquidity – Highly volatile pairs, like those mentioned above, often attract more market participants, leading to even higher liquidity as more traders take interest in the pair.
- Potential Outperformance – Due to larger price swings, high-volatility pairs have a relatively higher profit potential compared to lower-volatility pairs, especially in shorter time frames.
- Strong Breakout Potential – An elevated level of volatility increases the likelihood of price breaking out of key levels (i.e., support and resistance levels).
How to Trade Volatile Forex Pairs
Here’s a simple five-step process you can follow to trade volatile forex pairs:
- Step 1: Identify the volatile currency pair you want to trade: First, identify the specific currency pairs you want to trade. You can simply choose from the ten currency pairs covered here, as they have the highest volatility in the market.
- Step 2: Choose the right timeframe for you: Second, after selecting the forex pairs, decide on the specific timeframe and time of day you will trade. This is important because the time of day is a key factor affecting market volatility. You can choose to trade during periods of high volatility or at times when the market is less volatile.
- Step 3: Adapt a conservative risk management approach: Third, since volatile currency pairs tend to have wider price swings, making them more unpredictable—we recommend using a conservative risk management system. Hence, risk no more than 2% of your current capital per trade and maintain at least a 1:2 risk-reward ratio.
- Step 4: Practice your trading strategy and risk management system: Fourth, to ensure you have a trading strategy tailored for volatile forex pairs, you can experiment on a demo account first. Also, while trading virtual funds, we recommend already implementing conservative risk management to develop good habits and seamlessly transition to real trading.
- Step 5: Start small and refine your trading approach continuously: Finally, when you have a working trading strategy and sound risk management, you can transition to live trading. That said, we recommend starting with a small capital you can afford to lose, as well as journaling all of your trades to identify aspects you can improve further.
That said, if you want to explore effective trading strategies for high-volatility environments as well as learn other key concepts in Forex Trading, we recommend you visit our additional resources at WR Trading.
Conclusion
Trading volatile forex pairs can be both challenging and rewarding, offering opportunities for substantial outcome but also posing significant risks. By understanding the factors driving volatility, practicing effective risk management, and refining your strategies, you can navigate these dynamic markets with confidence. Stay informed, trade smart, and leverage volatility to your advantage.
Frequently Asked Questions on Volatile Forex Pairs
What are Volatile Forex Pairs?
Volatile forex pairs are currency pairs that experience significant price fluctuations within short periods. These pairs often have higher risks but also present greater opportunities for traders, especially those using short-term strategies like scalping or day trading.
Why do some Forex Pairs have higher volatility than others?
Volatility in forex pairs is influenced by factors such as geopolitical events, central bank policies, market sentiment, economic data releases, and fluctuations in commodity prices. Emerging market currencies and those tied to commodities often exhibit higher volatility.
What are the risks of trading Volatile Forex Pairs?
Trading volatile forex pairs involves risks such as wider spreads, erratic price movements, and increased likelihood of emotional trading. Effective risk management, such as setting appropriate stop-loss levels and limiting position sizes, is crucial to mitigate these risks.
How to trade High-Volatility Forex Pairs successfully?
To trade volatile forex pairs with high rewards, focus on a conservative risk management approach, such as risking no more than 2% of your capital per trade. Use demo accounts to test strategies, trade during optimal timeframes for your style, and continuously refine your approach based on trading journals.
