How Major Currency Pairs Change in the Forex Market
Among the major currency pairs in the Forex market, EUR/USD is the most traded. More than 50% of all trades involve the U.S. dollar. However, the currency strength of each country’s currency can change, especially when there are financial events in the region. In order to help you understand how currency values change, here are some common currency pairs. All currency pairs on the Forex market are valued against each other. These currency pairs make up seventy-five percent of the total traded volume.
USD/CHF: The Swiss franc is often referred to as the Swiss franc, as the Swiss government controls the franc. Its value is largely determined by fluctuations in the euro. The Canadian dollar, however, is heavily influenced by oil prices. The Swiss franc has historically been a safe haven currency. Its value is relatively stable, but there are other currencies to watch for. Keeping an eye on these currencies can make or break your Forex trading strategy.
EUR/USD: This pair fluctuates periodically, making it one of the most volatile Forex currency pairs. Due to this, it can offer great profits or big losses. However, the high liquidity of the EUR/USD pair makes it easy for investors to enter and exit the market. With less volatility, large slippages are rare. You should choose a currency pair with high volume if you want to avoid big losses. There is a high likelihood of large slippage in major currency pairs, but it is less likely to happen compared to thinly traded exotic ones.
Another important factor in trading currencies is the spread. This can be fixed or variable, but in either case, the spread is changing with the bid and ask prices. A wide forex spread can trigger a margin call, which occurs when the value of the account drops below the amount of money you need to cover the trading requirement. The spread may be fifty percent or more, which could result in liquidation of your positions. If you don’t watch for these changes, you may end up losing your trade and incurring a loss.
EUR/USD: This pair is also known as “the Euro.” The European Central Bank was founded in 1999, and the euro has become the base currency. Its value is influenced by US Federal Reserve economic releases. If the dollar increases in value, the EUR/USD pair decreases. If the US dollar strengthens, EUR/USD will decrease. In turn, it is possible to make money with this currency pair by using the money you earn through Forex trading.
While EUR/USD is the world’s most traded currency pair, it’s far from the only one. The Euro is the most traded, representing 20% of all Forex transactions. Other major currency pairs include EUR/GBP, GBP/JPY, and CHF/GBP. However, there are many other currency pairs that you can trade in as well. All you need to do is select the currency you’d like to trade in and start profiting!
Exotic currencies are not as common, but are good for trading in the Forex market. The most popular minor currencies in the Forex market are the GBP, EUR, and JPY. Exotic currency pairs are those made up of two major currencies and a currency from a developing country. These currencies usually have low liquidity and a high spread. They’re generally more volatile and have less liquidity than major currency pairs. If you’re looking to buy or sell a currency, choose a pair that’s easy to understand and trade.
The USD/JPY is the second most liquid currency pair in the world, after the euro and the pound. Both currencies represent the second largest economy in the world, and the value of USD/JPY is highly influenced by the interest rate differential and correlation between the U.S. and Asian equity markets. USD/JPY is also positively correlated with USD/CAD and USD/CHF. This means that these two currencies have a lot in common, and are the ideal place for newcomers to the Forex market.
Exotic currencies are the currencies not paired with the US dollar. While these currencies are traded more frequently, they require a two-transaction process to be completed. In addition to major currency pairs, there are cross-currency pairs, and exotic currency pairs. Exotic currencies are typically those made up of currencies from developing nations, and have wide spreads. The spread on these pairs is typically wider, and traders must be cautious when investing in them.