Currency pairs to watch in the Forex market
Currency trading is a popular and lucrative investment option for those interested in trading foreign currencies. With the rise of the global economy, forex trading has become a hot topic amongst the investor community, and understandably so.
To make the most out of your forex trading trips, it is important to study the market and keep a close eye on the currencies that are making the most noise. Here are the top currency pairs to watch in the forex market.
EURO/US DOLLAR (EUR/USD)
The euro is considered one of the most traded currencies in the world, and rightfully so, as it accounts for nearly one-third of all forex trades. It has a long history of stability and is a highly liquid currency. Meanwhile, the US dollar is the most widely traded currency and holds a reserve currency status. Consequently, the EUR/USD pair is the most traded one in the forex market. Paying close attention to this pair provides traders with a better understanding of the overall market and the direction it might be heading.
BRITISH POUND/ US DOLLAR (GBP/USD)
Another top currency pair that traders should closely monitor is the GBP/USD. The British pound is the fourth most traded currency globally and is heavily influenced by political and economic happenings in the UK. The US dollar, as mentioned earlier, is the world's reserve currency, its movement can affect the GBP/USD pair. Given the complexities of the political and economic layouts in both countries, traders should straddle the British GBP/USD pair with moderation and caution.
US DOLLAR/ JAPANESE YEN (USD/JPY)
The USD/JPY currency pair is particularly sensitive to global geopolitical events worldwide but is susceptible to economic factors that may arise in the US and Japan. Japanese yen frequently serves as a safe-haven asset, which can skew the biases of the USD/JPY pair. Traders are advised to be more cautious with the Yen as it can sometimes be unpredictably volatile.
AUSTRALIAN DOLLAR/ US DOLLAR (AUD/USD)
Nicknamed the "Aussie," the Australian dollar's performance is correlated to the country's natural resources, commodity prices, economic growth, and the Chinese economy. Traders should constantly observe the commodity price levels and the Chinese economy to anticipate the movement of the AUD/USD pair.
US DOLLAR/SWISS FRANC (USD/CHF)
The Swiss Franc is Switzerland's national currency, making it a safe haven currency amongst traders worldwide. It is also highly liquid and is correlated with the US dollar. The USD/CHF pair is sensitive to global geopolitical uncertainties that impact the universal forex scene.
CONCLUSION
Though the above currency pairs are subject to political, economic, and geopolitical factors, they are considered the most predictable amongst forex traders. Keeping a close eye on these pairs' movements, traders can more efficiently predict and anticipate the next market trends and make better-informed trading decisions. However, it is recommended always to do thorough research before trading currencies.