You want to start trading, but do you know what currency pairs and major forex currency pairs are? If you don’t know, don’t worry; let us see what these terms stand for; currency pairs measure the worth of one currency against another. It is a single unit that can be bought, sold, and traded worldwide. However, major currency pairs contain US Dollar on one side.
The Euro Dollar Currency pair is also known as “Fiber” in the trading world, representing the world’s two largest economies. It trades at tight spreads, and its high volume leads to fewer prices between the bid and the ask offer. It is also considered the most profitable pair due to its high liquidity.
As the name describes, the US Dollar is set against the japan yen giving high volumes for the traders. The first point you’ll observe is that the value of the single pip is larger than the majority of other currencies. It works relatively at a low spread, and you’ll find high volatility due to the Asian Market Forces.
One of the popular currency pairs is often called “The Swissie” in the US. The dollar is against the Swiss Franc. Moreover, you’ll observe that this pair’s strong demand for both currencies exists. Before starting, grab brief knowledge about the employment and GDP of both countries because loss and profit highly depend on this data.
It is widely recognized as the “Safe Haven,” where the pound appears as the base currency, and the US dollar appears as a quote currency. The third most currency pair whose price is strongly controlled by the actions of the central banks.
Commodity Currency Pairs:
In these forex pairs, price is heavily determined by the particular entity upon which the currency’s economy is heavily dependent.
Again it is the best major forex currency pair in the world because both currencies approached the equivalence in history (1:1). Start trading in this pair because here you’ll find high liquidity. A small tip from our team regarding this currency pair is that its best timing is when you see the volatility level going high. The worth of the Canadian dollar is tied to the price of oil.
The pair NZD/USD is called “kiwi,” which heavily depends upon trade and tourism, the key to the New Zealand economy. Before opening a trade in the NZD/USD, traders should have complete information about the monetary policies.
In global foreign exchange, it is considered the fifth most traded currency with high liquidity, tight spreads and 24 hours availability. Community prices are also very sensitive because Australia exports large raw materials. AUD/USD also moves with Chinese economic data due to the strong relationship between the two countries.
Factors affecting the Major Forex Currency Pairs:
We all know that various factors strongly affect the major currency pairs in the forex market.
Interest rates influence the monetary and financial stability of the central banks. The demand for the currency also increases whenever the central banks increase the interest rate. As a result, Investors and traders hunt for a higher yield in a particular currency relative to other currencies.
Elections, corruption issues, trade wars and the changes in police create instability in the forex market. So, you must strongly observe the government policy, which can boost or devalue the relative currency value.
The most important factor that affects the currency pair is volatility. This factor raids the pairs at any moment due to unexpected changes in the interest rate, economy, and political instability.
Advantages of the Major Currency Pairs:
- Pairs contain the liquid markets open to trade for 24 hours.
- The currency pairs likely have tighter spreads, enhancing the profit margin by reducing the dealing costs.
- Hard currencies don’t depreciate suddenly or less fluctuate in value.
Which factor affects the currency pairs?
- Central banks
- Interest rates
- Economic Data
How many major currency pair exists?
There are 4 major pairs; however, the three commodity pairs are also considered the major. Check reviewfx.
In the end, I say one thing we can’t measure is which currency pair is more beneficial with lower loss risks. The reason is that stock markets fluctuate. Surprisingly all you can do is focus on the technical analysis and other indicators. If you’ve any problems, comment below; our team will help you in every regard.