Important Information

You are visiting the international Vantage Markets website, distinct from the website operated by Vantage Global Prime LLP
( www.vantagemarkets.co.uk ) which is regulated by the Financial Conduct Authority ("FCA").

This website is managed by Vantage Markets' international entities, and it's important to emphasise that they are not subject to regulation by the FCA in the UK. Therefore, you must understand that you will not have the FCA’s protection when investing through this website – for example:

  • You will not be guaranteed Negative Balance Protection
  • You will not be protected by FCA’s leverage restrictions
  • You will not have the right to settle disputes via the Financial Ombudsman Service (FOS)
  • You will not be protected by Financial Services Compensation Scheme (FSCS)
  • Any monies deposited will not be afforded the protection required under the FCA Client Assets Sourcebook. The level of protection for your funds will be determined by the regulations of the relevant local regulator.

If you would like to proceed and visit this website, you acknowledge and confirm the following:

  • 1.The website is owned by Vantage Markets' international entities and not by Vantage Global Prime LLP, which is regulated by the FCA.
  • 2.Vantage Global Limited, or any of the Vantage Markets international entities, are neither based in the UK nor licensed by the FCA.
  • 3.You are accessing the website at your own initiative and have not been solicited by Vantage Global Limited in any way.
  • 4.Investing through this website does not grant you the protections provided by the FCA.
  • 5.Should you choose to invest through this website or with any of the international Vantage Markets entities, you will be subject to the rules and regulations of the relevant international regulatory authorities, not the FCA.

Vantage wants to make it clear that we are duly licensed and authorised to offer the services and financial derivative products listed on our website. Individuals accessing this website and registering a trading account do so entirely of their own volition and without prior solicitation.

By confirming your decision to proceed with entering the website, you hereby affirm that this decision was solely initiated by you, and no solicitation has been made by any Vantage entity.

I confirm my intention to proceed and enter this website Please direct me to the website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom

By providing your email and proceeding to create an account on this website, you acknowledge that you will be opening an account with Vantage Global Limited, regulated by the Vanuatu Financial Services Commission (VFSC), and not the UK Financial Conduct Authority (FCA).

    Please tick all to proceed

  • Please tick the checkbox to proceed
  • Please tick the checkbox to proceed
Proceed Please direct me to website operated by Vantage Global Prime LLP, regulated by the FCA in the United Kingdom.

×

Are you long or short on indices?

Trade Indices Now >
Long Or Short On Indices?
View More
SEARCH
  • All
    Trading
    Platforms
    Academy
    Analysis
    Promotions
    About
  • Search
Keywords
  • Forex Trading
  • Vantage Rewards
  • Trading Fees
  • facebook
  • instagram
  • twitter
  • linkedin
  • youtube
  • tiktok
  • spotify
6 Major Forex Pairs to Trade

TABLE OF CONTENTS

6 Major Forex Pairs to Trade

6 Major Forex Pairs to Trade

Vantage Updated Updated Tue, 2023 May 30 11:08

What are major forex pairs?

The most traded forex pairs are known as the “majors” and always contain the US Dollar on one side. This is because the USD is the world’s reserve currency and most dominant in trading volumes, according to the most recent BIS Triennial Central Bank Survey published in April 2022 [1]

While there are eight major currencies, there are only seven major currency pairs. 

  • The seven ‘majors’, make up 62% of total forex market turnover [2]
  • By order of trading volume, the majors are EUR/USD, USD/JPY, GBP/USD, USD/CAD, AUD/USD, USD/CHF, and NZD/USD.

Cross-currency pairs are the more frequently traded currencies that do not include the US Dollar. These are normally less liquid. Exotic currency pairs are from emerging and developing economies, paired with one major currency.  

  • USD/CNY (Chinese Renminbi) accounts for 6.6% of forex market turnover according to the latest BIS report [3]
  • Emerging market currencies make up 13.8% of the total turnover [4]

 Trading the major currency pairs

Major forex pairs

Three key reasons to consider when trading the majors are:

1. Liquidity – This means there is abundant liquidity and a very high level of activity in their markets. This enables traders to enter and exit their positions with ease, even when volatility is high.

2. Low spreads – High liquidity and so high volumes generally results in lower spreads. This may be beneficial to all traders seeking to keep costs to a minimum as the bid-ask spreads tend to be narrow. 

3. Less slippage – Great volume mean traders are constantly buying and selling the majors. This can result in less chance of slippage or at least smaller slippage when it does occur. Slippage, when the execution price is different to the requested price, can be an issue in less liquid markets.  

EUR/USD

EUR/USD accounts for nearly one in four forex transactions [5]. This means it has the largest global trading volume and is one of the most popular currency pair in the world. This outstanding liquidity means traders enjoy consistently low spreads.

By combining two of the three biggest economies, the major is an excellent measure of the overall health of the global economy. Prices in EUR/USD constantly reflect the latest economic and fundamental data, as well as the central bank policies of the US Federal Reserve and the European Central Bank (ECB). 

The ECB currently holds eight meetings per year (approximately every six weeks) with the initial policy announcement at 13:45 CET and a press conference at 14:30 CET. The bank also releases new staff macroeconomics forecasts at these meetings on a quarterly basis. 

USD/JPY

This is the second most traded currency major and it represents a major quantity of daily trading [6]. The yen is often seen as a “safe haven” currency and investors will buy the yen when volatility picks up and risk sentiment turns sour [7]. JPY is also used by carry traders who borrow the yen and invest it in higher yielding currencies. 

The Bank of Japan meets eight times a year and at four of these meetings (January, April, July and October), the bank also publishes the Outlook for Economic Activity and Prices which are its latest forecasts. 

The bank has been battling with stubbornly low inflation for decades. This has resulted in ultra-easy accommodative monetary policy with very low interest rates. 

GBP/USD

The UK is the world’s fifth biggest economy and is currently just holding off a rising India. Before World War One, the pound was the largest currency in the world with over 60% of global debt being held in sterling [8]

This major often goes by the moniker of “cable”, which originated in the mid-19th century when undersea copper cables used to transmit the bid and ask quotes across the Atlantic. 

GBP/USD is heavily traded and shares similar characteristics with EUR/USD. Both are correlated due to the economies being interlinked, though Brexit has meant a rethink in terms of previous ties. 

The Bank of England usually meets every six weeks to decide on monetary policy which it does through the nine-person committee, the MPC. Political upheaval in the UK in recent years has also lent itself to volatility and some explosive trends. High liquidity and tight spreads make cable attractive to trade.

USD/CAD

The Canadian dollar, also known as the “loonie” is one of the commodity dollar currencies. The Canadian economy is a major exporter of raw materials and commodities which means the CAD is driven by external factors in the global economy. 

The currency is often closely correlated to crude oil prices and direction. It can also have a strong relationship with the US stock market benchmark, the S&P 500, and the global risk sentiment.

The Bank of Canada carries out monetary policy by adjusting short-term interest rates. It meets on eight fixed dates each year, typically on a Wednesday.  

AUD/USD

This is a popular forex pair with the “aussie” also regarded as a commodity dollar currency. Notably, it is not among the six pairings which make up part of the widely followed US Dollar Index. 

The Australian economy is heavily skewed towards raw materials and commodities, including iron ore and coal. That means the prices of these commodities are a key driver of AUD. Australia’s biggest export market is China, hence Chinese policies and Sino-Australian trade relations are an important factor in price action. 

Monetary policy in Australia is decided by the Reserve Bank of Australia (RBA) which normally meets eleven times each year, on the first Tuesday of each month except in January. 

USD/CHF

The history of the Swiss France goes way back to the 1700s. Its relatively small economy is a leading force for financial security and privacy, partly due to the political neutrality of Switzerland. 

The “swissie” is generally regarded as a safe-haven currency and will attract buyers in times of high uncertainty. Historically, the country has enjoyed very little inflation.

The Swiss National Bank (SNB) looks after monetary policy decisions and conducts in-depth policy assessments in March, June, September, and December. The CHF is heavily backed by large reserves of gold, bonds and financial assets which help the SNB ensure its stability during times of volatility.

References

  1. “OTC foreign exchange turnover in April 2022 – BIS” https://www.bis.org/statistics/rpfx22_fx.htm Accessed 29 May 2023
  2. “OTC foreign exchange turnover in April 2022 – BIS” https://www.bis.org/statistics/rpfx22_fx.htm Accessed 29 May 2023
  3. “OTC foreign exchange turnover in April 2022 – BIS” https://www.bis.org/statistics/rpfx22_fx.htm Accessed 29 May 2023
  4. “OTC foreign exchange turnover in April 2022 – BIS” https://www.bis.org/statistics/rpfx22_fx.htm Accessed 29 May 2023
  5. “Major Pairs: Definition in Forex Trading and How to Trade – Investopedia” https://www.investopedia.com/terms/forex/m/majors.asp Accessed 29 May 2023  
  6. “What Are The Most Traded Currency Pairs in Forex? – TraderMade” https://tradermade.com/blog/what-are-the-most-traded-currency-pairs-in-forex Accessed 30 May 2023
  7. “Exploring the Japanese yen – a ‘safe haven’ currency? – Hargreaves Lansdown” https://www.hl.co.uk/news/articles/exploring-the-japanese-yen-a-safe-haven-currency Accessed 30 May 2023
  8. “Why the British Pound Is Stronger Than the U.S. Dollar”. https://www.investopedia.com/ask/answers/070516/why-british-pound-stronger-us-dollar.asp Accessed 29 May 2023
  • vantage academy open account

    Open Trading Account

    Discover the endless trading possibilities with our cutting-edge platform, designed to empower both beginners and seasoned traders alike.

  • vantage academy app

    Download Vantage App

    Trade on the go with the Vantage All-In-One Trading App, where smooth execution and market access come together in the palm of your hand.

  • vantage academy start trading

    Start Trading

    Are you an existing user? Login to your account to start trading 1,000+ products including forex, indices, gold, shares and more.