Which forex pairs are the best: 10 currencies to watch for trading

For those starting in the currency trading industry, choosing the right currency pairs is the first crucial step. Here are 10 major time pairs for trading in the forex market, categorized into major currencies, secondary currencies, and emerging market currencies. Notably, emerging market currencies tend to show higher volatility and wider (spread). Understanding these differences will help traders select pairs that match their risk tolerance and strategic approach.

Understanding Forex Currency Pairs

Forex currency pairs consist of two countries’ currencies with an exchange rate relationship, such as EUR/USD, where the euro (EUR) is the base currency, and the US dollar (USD) is the quote currency. An exchange rate like EUR/USD = 1.3045 means 1 euro can be exchanged for 1.3045 US dollars.

The value of these pairs is not fixed but fluctuates based on economic factors, political situations, and market sentiment. Movements are measured in (PIP), which is critical for calculating profit and loss.

Traders leverage exchange rate changes to generate income from value differences. Factors such as interest rates, inflation, and economic statistics influence these rates. For example, strong economic reports from the Eurozone may strengthen the euro against the dollar, affecting EUR/USD.

Understanding these elements enables traders to make informed decisions and manage risks systematically. Therefore, forex pairs are not just tools for international trade but also avenues for profit and investment.

Comparison Table of 10 Highly Liquid Forex Pairs

Note: Pips/Day = average price movement range | Market Share = proportion of global trading volume

10 Forex Pairs to Watch

1. EUR/USD - Euro-Dollar (The most traded currency pair)

EUR/USD is the most prominent pair worldwide, serving as a barometer for global economic stability and reflecting trade between the Eurozone and the US.

Highlights: Extremely high liquidity with narrow spreads, mainly influenced by decisions from the European Central Bank (ECB) and the Federal Reserve. Key data include regional GDP, interest rate changes, and employment figures.

Best Trading Hours: 08:00–16:00 GMT (when London and New York markets are open simultaneously), significantly increasing volatility and profit opportunities.

Volatility: Average 70–90 Pips per day; major economic announcements can cause additional fluctuations.

Suitable For: Beginners due to predictable movements and high liquidity, as well as experienced traders seeking short-term and long-term strategies.

2. USD/JPY - Dollar-Yen (The Asian Market Standard)

USD/JPY reflects the relationship between the world’s two largest economies and is a key indicator for the Asian market. US and Japanese economic indicators such as GDP, inflation, and interest rates impact it. Additionally, the Bank of Japan (BoJ) monetary policy plays a significant role.

Highlights: Moderate volatility with responsiveness to economic and political events. Influenced by interest rate differentials between the US and Japan. Yen is considered a “safe-haven” currency.

Best Trading Hours: 23:00–03:00 GMT (when Tokyo is most active), and during the London-New York overlap.

Volatility: 50–70 Pips per day, potentially higher during periods of economic uncertainty.

Suitable For: Traders favoring Asian session trading, macro trend analysis, or risk hedging against broader market volatility.

3. GBP/USD - Pound-Dollar (High Volatility)

GBP/USD, known as “Cable,” reflects the relationship between the UK and the US. It has a long trading history and is known for its volatility and sensitivity to economic and political developments.

Highlights: Greater volatility than EUR/USD, driven by economic reports like GDP, interest rate decisions, and employment data. Sensitive to political events such as Brexit.

Best Trading Hours: 08:00–16:00 GMT (London-New York overlap), when liquidity and volatility are at their peak.

Volatility: 90–110 Pips per day; major news can cause sharp swings.

Suitable For: Intermediate to advanced traders seeking high volatility, especially for news-based and short-term trading strategies.

4. USD/CHF - Dollar-Franc (Europe’s Safe Haven)

USD/CHF pairs the US dollar with the Swiss franc, often regarded as a safe-haven currency due to Switzerland’s political stability and financial sector.

Highlights: Stable correlation with low volatility compared to GBP/USD. The franc acts as a “safe” currency, moving inversely to risk sentiment. Influenced by Swiss central bank policies, inflation, and export data.

Best Trading Hours: 07:00–16:00 GMT (when European and US markets overlap), as Swiss markets are linked to Europe.

Volatility: 50–70 Pips per day, increasing during major US or Swiss economic announcements.

Suitable For: Risk-averse traders seeking stability or using the pair for hedging and sentiment-based strategies.

5. AUD/USD - Australian Dollar (Commodity-Linked Currency)

AUD/USD, or “Aussie,” reflects the relationship between Australia and the US, heavily influenced by commodity prices, especially gold and iron ore. Trade relations with China significantly impact this pair.

Highlights: Tied to global commodity markets. Employment figures and the Reserve Bank of Australia (RBA) policies are influential. Sensitive to economic data from China.

Best Trading Hours: Asian session (00:00–04:00 GMT) and during the Sydney-New York overlap. Volatility increases with Australian economic releases.

Volatility: 60–80 Pips per day; commodity price swings can amplify movements.

Suitable For: Traders focusing on commodities and Asian hours, employing trend-following or range strategies.

6. USD/CAD - US Dollar / Canadian Dollar (Loonie)

USD/CAD, known as “Loonie,” reflects the US-Canada relationship. Its nickname derives from the loon bird on the Canadian coin. It is heavily influenced by crude oil prices (Canada’s main export) and economic data from both countries.

Highlights: Highly affected by commodities, especially oil. Often correlates with global oil prices. Influenced by economic indicators and Bank of Canada (BoC) and Fed decisions.

Best Trading Hours: New York session (12:00–20:00 GMT), when US and Canadian markets are active.

Volatility: 60–80 Pips per day, increasing with oil price changes or major economic news.

Suitable For: Commodity-focused traders, especially oil traders, seeking moderate volatility.

7. EUR/GBP - Euro-Pound (European Market)

EUR/GBP reflects the relationship between the Eurozone and the UK, widely traded especially in Europe.

Highlights: Less volatile than GBP/USD but still sensitive to economic data from Europe and the UK. Influenced by trade relations, ECB and BoE decisions, and Brexit-related events.

Best Trading Hours: London session (07:00–16:00 GMT), when both currencies are actively traded.

Volatility: 40–60 Pips per day; major news can cause increased swings.

Suitable For: Traders interested in European economic trends seeking lower volatility than GBP/USD.

8. USD/CNY - US Dollar / Chinese Yuan (Market Movers)

USD/CNY reflects the US-China relationship and attracts high attention due to the economic influence of both nations.

Highlights: Strictly controlled by the People’s Bank of China (PBoC). Driven by Chinese policies, trade balance, and economic data. US-China tensions significantly impact it.

Best Trading Hours: Asian session (01:00–09:00 GMT), with increased volatility during major Chinese economic releases.

Volatility: 50–70 Pips per day, potentially higher with government interventions.

Suitable For: Emerging market traders, macro analysts, especially those understanding Chinese policies.

9. NZD/USD - New Zealand Dollar (Kiwi)

NZD/USD, or “Kiwi,” reflects the relationship between New Zealand and the US, heavily influenced by commodity prices, especially dairy products (New Zealand is a major exporter).

Highlights: Tied to global dairy prices. Central Bank of New Zealand (RBNZ) indicators are influential. Correlated with risk sentiment and global economic conditions, leading to high volatility.

Best Trading Hours: Asian session (00:00–04:00 GMT) and during the New York overlap (12:00–16:00 GMT).

Volatility: 50–70 Pips per day; commodity price swings can increase movement.

Suitable For: Commodity traders and Pacific-region traders, suitable for trend and range strategies.

10. USD/HKD - US Dollar / Hong Kong Dollar (Pegged Currency)

USD/HKD pairs the US dollar with the Hong Kong dollar, which is pegged around 7.78–7.85 by the Hong Kong Monetary Authority (HKMA).

Highlights: Driven by US interest rate decisions and Hong Kong economic data. The peg provides stability and lower volatility, suitable for capital preservation.

Best Trading Hours: Asian session (01:00–08:00 GMT), when Hong Kong markets are active.

Volatility: 10–30 Pips per day, due to the peg.

Suitable For: Traders seeking stability or carry trade strategies, focusing on Asian markets and risk-averse approaches.

Summary and Future Outlook

Major forex currencies like the US dollar, euro, and yen dominate the market due to their stability and high trading volume. However, various factors such as trade relations, interest rate changes, and geopolitical or economic turmoil can impact each pair.

For traders, keeping abreast of global developments is essential, as these factors influence decision-making and profitability. Real-time price updates and market understanding are key to effective forex trading and risk management.