7 Major Currency Pairs - Forex Currency Pairs

The market turnover is around $7.2 trillion daily, with 95% of all trades conducted by speculators aiming for profit. Most of these transactions involve five major currencies, which include:

The Currency Pairs for These Currencies Are

EURUSD
GBP/USD
USDCHF
USDJPY
AUD USD
EURJPY
GBP JPY

The trading symbols delineated above correspond to the sovereign currencies of their respective nations, utilizing a standardized three-letter nomenclature. This is the standardized convention employed in FX transactions for these currencies: for individuals unfamiliar with currency designations, the preceding list translates as follows: USD - United States Dollar, EUR - Euro, GBP - Great British Pound, JPY - Japanese Yen, & CHF - Swiss Franc.

The USD is the most transacted pair

USD - 85 % of all the daily market transactions

EUR - 40% of all

JPY - 20 % of all

GBP - 13 % of all

CHF - 9 % of all

US Dollar or USD - the United States dollar is the main currency of the world. It is used as the standard measure of all other currencies which are traded and transacted in the trading market. All others are in general quoted in terms of US dollar.

The US dollar is a safe-haven currency, because it is held as a reserve by a lot of central banks. In the times of economic recession the dollar will strengthen due to the fact that investors buy the dollar due to its safe-haven status. On the other hand when the economies are doing well individuals will go for those that are higher yielding like the EURO, Pound, Swiss Franc and Australian Dollar.

In the market, the dollar is bought and sold against other important currencies used in foreign exchange, like the Euro, Japanese Yen, British Pound, and Swiss Franc.

The Euro (EUR) holds significant international influence as it represents the combined economies of 17 countries in the European Monetary Union. This collective representation places the Euro as the second most traded currency globally, following the US dollar.

The Japanese yen, or JPY, ranks third in trading volume worldwide thanks to its high liquidity. Japan has the second-largest economy after the US.

The British Pound (GBP) comes from the UK's economy. This is the third largest after the US and Japan. GBP is very liquid and ranks fourth in trading volume.

Swiss Franc or CHF - Swiss Franc is the only major of a major European country that doesn't belong to the European Union or G-7 countries. Although Swiss economy is relatively small, the Swiss Franc is one of the 5 major currencies on the Currency Trading Market. This is due to and because of the strength of the Swiss banking system and the Swiss economy which makes the Swiss Franc stable with a high demand that exceeds supply.

The Canadian Dollar (CAD) and Australian Dollar (AUD) are traded currencies within the forex market. However, they are not categorized among the major currencies due to their relative lack of liquidity.

After classifying the currencies, there are 2 categories:

Major pairs
Crosses

Major Pairs

Currencies are traded and transacted in pairs of 2 e.g. EURUSD

Majors have a combination of the USD and one other major(EUR, JPY, GBP, CHF).

The 4 major currency pairs or the big four in Forex are:

EUR USD
USDJPY
GBPUSD
USD/CHF

These are the most traded because they have a high turnover and are the most profitable.

These are the best pairs for day trading, if you as the trader want to make the most profit it is best to only trade these 4 majors only.

Daily Trade Turnover of Currencies by Volumes

USD is the most transacted, followed by EUR, GBP, JPY & CHF, the daily trade turnover volume taken up by each of the 5 in terms of percent is shown below:

USD - 85%

EUR - 40 %

JPY - 20%

GBP - 13 %

CHF - 9%

Since transactions are in pairs the total will be 200 %

For example the EURUSD pair: EUR USD = 100 % EUR + 100 % USD

Adding up the totals of the four main pairs gives us 85 + 40 + 20 + 13 + 9 = 167%. Remember that these four include five different currencies, which add up to 167% together. This amount of the total trading volume is why these four currency pairs are called major currency pairs, or just "majors". This big part of the total daily trading volume also makes these four the best forex pairs to trade, especially for Day Traders.

Therefore volume for Majors is:

FX Major Pairs = 167 % of all turnover

Other Pairs Combined = 33 % of all turnover

Best pairs to trade: Majors see the most action, so pros stick to them. They offer high liquidity and steady moves. This makes USD, EUR, GBP, JPY, and CHF ideal for analysis as the top liquid pairs.

Higher liquidity correlates with greater volatility, and volatility suggests a greater probability that a currency will trend decisively in one direction. When prices are moving consistently toward a target, generating profit is simpler than when prices are oscillating without a clear direction - i.e., in a range-bound market.

Other pairs count as minor currency pairs. They cover 33 percent of daily volume. Experts call them illiquid due to low volatility. Price action stays choppy or stuck in ranges most times. Minors prove toughest for trading studies. They lack clear moves in one direction and skip trends.

Simply trading the EURUSD allows a trader to participate in 125% of overall turnover volume (85% plus 40%), representing approximately two-thirds of total market transactions. This is one of the reasons why some traders focus solely on the EURUSD pair.

Currency Crosses

These are the pairs that do not have USD & involve cross-currency transactions.

Example:

EUR JPY
GBPJPY
EUR GBP
AUDJPY
GBP CHF
EURCHF
CHF JPY

To buy EURJPY you first buy EURUSD & then buy USDJPY.

Trading EURJPY consequently means you have also transacted two other major currency pairs. This high transaction volume is why the major pairs experience substantial turnover, as all minor pairs incorporate these two majors.

This reality arises because the market does not permit the direct exchange of EUR for JPY: instead, a conversion of EUR into USD is required, followed by utilizing that USD to acquire JPY. This necessity for intermediate USD transactions is precisely why these are termed 'currency crosses.' Furthermore, this intermediary function explains why the USD is involved in approximately 85% of all trading operations, functioning as the foundational currency for these exchange processes.

To buy GBPJPY you first buy GBPUSD & then buy USDJPY

Cross-pair spreads are higher compared to major currency pairs due to their unique structure. Trading these pairs requires handling two simultaneous transactions during buying or selling phases.

Crosses aren't traded as much and so most traders don't trade them a lot, which is why these Forex currencies tend to move in less predictable ways because not as many people are trading them.

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