If you’re in the trading world, you’ve probably heard of “major” pairs. However, when you are a beginner, you don’t understand all the intricacies of the industry. Fortunately, this article explains what you need to know about eight couples.
Currency pairs are on the Forex (foreign exchange market) and measure the value of one currency against another.
Currency pairs include a “base” currency (the first named) and a “quotation” which is secondary. When you see the price, it shows how much of the “quote” currency you need to buy the base.
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Currency trading is the process of buying and selling currencies, often through the foreign exchange (FX) market, also known as Forex.
The foreign exchange market is the most liquid and largest financial market in the world, with more than $5 trillion in currencies that people trade.
Since trading involves simultaneously buying and selling currency, Forex always requires you to do it in pairs.
So you can buy a pair as a single unit, for example the US dollar and the euro (EUR/USD) or the British pound and the Japanese yen (GBP/JPY).
Traders can choose from many forex pairs, but experts consider a few in particular to be the main players in the industry.
The major forex pairs are the ones that people trade the most. Overall, almost all of them involve the US dollar, as the country occupies the position of the world’s largest economy. Check out all the options:
USD/JPY
It is a currency that includes the US dollar and the Japanese yen. It’s called a “gopher” and its price shows how many yen you need to buy dollars.
Gopher is one of the most popular currencies in the world and is intrinsically linked to the price of gold. Along with other currency pairs, experts consider it to be the main factor driving the global economy.
USD/CHF
This currency is based on the value of the dollar compared to the Swiss franc. The price you see on the charts reflects how many francs you have to buy for one dollar.
The name of the currency is “swissie”. It has gained a lot of popularity worldwide as many people believe that it is a safe haven during times of unstable economy or challenging circumstances.
Since the Swiss nation is stable and neutral, “Swiss” has gained similar fame. When there is economic trouble worldwide, this currency tends to remain stable.
GBP/USD
Also known as the “cable” for its mid-1800s foundation, the currency underpins the value of the British pound relative to the U.S. dollar.
It is one of the most popular currencies in the world and compares how many dollars you need to buy British pounds.
In 2022, the value of the pound has fallen drastically due to various new policies that the UK has adopted. Therefore, this currency has also undergone changes.
Currency growth, political events and other circumstances can affect the value of a currency, which is what happened with this currency. However, “cable” is still quite popular among traders.
EUR/USD
Political events and economic growth have fundamentally affected the value of the US dollar against the euro since its introduction in 1999. However, the currency remains one of the most popular in which to invest.
The currency compares how many US dollars you need to buy one euro. Recent events have also caused the US dollar to fall against the euro, the biggest change the world has seen in years.
AUD/USD
Although not as popular as the above pairs, the “Aussie” currency is also well known. It reflects how many dollars you need to buy one Australian dollar.
This currency represents two of the world’s best-known and most stable economies. In fact, that’s why it’s a popular pair to buy. Aussie prices are often linked to the value of gold, making them constantly fall or rise.
NZD/USD
Also known as the “kiwi”, this currency represents how many US dollars you need to buy one New Zealand dollar.
This pair is intrinsically linked to the price of other commodities, such as silver and coal. In addition, dairy prices are also affected, as New Zealand is one of the world’s leading exporters of dairy products.
GBP/CAD
The last currency on this list compares how many Canadian dollars you need to buy British pounds.
Canada is one of the most stable countries in the world. Therefore, even though the UK economy has suffered changes, it is still a popular currency for many traders to consider.
The article briefly mentioned this earlier, but there are specific currencies that significantly affect commodity prices.
Some of the most well-known commodity currencies are AUD/USD, USD/CAD and NZD/USD.
These currencies are those that do not include the US dollar. Sometimes traders do not consider them profitable.
However, many currency crosses are still popular, such as GBP/EUR, EUR/CHF and EUR/JPY.
Currency pairs work by comparing the price of one currency to the price of another. Therefore, it allows you to understand the price of both.
Traders buy currency pairs in one unit. In other words, when you get one, you are relying on these two currencies to secure your position and achieve the desired result.
Various factors can affect the value of a forex pair, including economic changes in a country, war or the price of various commodities.
Because so many factors affect the value of FX pairs, it’s hard to choose one to invest in unless you’re willing to risk something. Therefore, you need to carefully study the charts before making a move.
The eight main pairs are the most popular among traders, but if you are not sure which one is the right one to invest in, there are many other options. Now that you understand how pairs work, you need to use this knowledge to your advantage and better investment opportunities!
What are the most traded currency pairs on Forex?
The most traded are those involving the US dollar.
How many Forex majors are there?
Some people believe there are eight disciplines, others say there are seven, and others believe there are 10.
What makes a good currency pair?
It depends on what you’re looking for, but overall the good pairs are the ones that look like they’ll have a profitable future.
Which forex pair pays the most?
EUR/USD is the most popular and is the most popular currency on the market.
Which currency is a commodity currency?
Commodity currencies are those whose value depends on commodities. AUS/USD is an example of this.
How many currency pairs are there?
There are many cross currency pairs as they include all pairs without the US dollar.
What are the four main trading currencies?
EUR/USD, USD/JPY, USD/CHF and GPB/USD.
