Forex major currency pairs are trading pairs that combine two different national currencies valued against each other. Each pair is based on a specific ISO currency code, such as USD for the US dollar, CAD for the Canadian dollar and EUR for the Euro.
The majors are the most liquid of all forex pairs, with high volume and tight spreads enabling large trades to be made. In contrast, minors and crosses tend to be less liquid.
EUR/USD
The EUR/USD (EURUSD) is one of the most popular Forex major currency pairs. It is a market that attracts traders from all over the world, as it offers excellent liquidity and extremely tight spreads.
Like most currency pairs, the EUR/USD is based on a price quote that represents the value of the Euro in relation to the US Dollar. When the price is rising, it means that the euro is becoming more valuable than the dollar; and when the price is declining, it means that the euro is losing its value.
Because the euro is a major currency, it often has an impact on prices of other currencies. For example, if the EU economy experiences bad news, such as government debt or an influx of immigrants, this could cause a fall in the value of the euro.
In addition, the currency is influenced by interest rates and other economic announcements that can affect its value. For example, the ECB and Fed release interest rate updates, which can influence the value of the pair.
GBP/USD
GBP/USD, or the British pound to US dollar exchange rate, is one of the most popular Forex major currency pairs. It is the best-selling pair for scalpers, day traders and swing traders because of its liquidity and high volatility.
The key factors that affect this pair include monetary policy of both the United Kingdom and the United States, employment numbers and news events & data releases. Traders should pay attention to economic reports such as the GDP, CPI and PPI that measure inflation, labour market conditions and monetary policy.
The pound/dollar exchange rate is also sensitive to political events, such as the UK vote to leave the European Union (EU) and the US trade relationship with the EU. Traders should be alert for these events so as to take advantage of opportunities.
AUD/USD
AUD/USD is the fifth most traded pair on the Forex market. Traders love this pair because it combines two currencies that play a key role in global economic growth.
The Australian economy is based on exports and commodities, and the AUD has been on an upward trend for years. It has also benefited from a strong trading relationship with China, and a stable central bank.
Another factor that has a direct impact on the AUD/USD exchange rate is the current trade balance, which measures how much is sold in Australia and bought in the US. A positive value indicates a trade surplus, while a negative one shows a deficit.
The interest rate divergence between the United States and Australia can also influence the AUD/USD price. The Federal Reserve and the Reserve Bank of Australia both set interest rates, and if both banks raise their rates, it can lead to a rise in the value of the AUD/USD.
EUR/GBP
The EUR/GBP is the currency pair that is made up of the euro and the British pound. It is also called the chunnel and offers a range of trading opportunities.
This pair is influenced by the policy actions of the European Central Bank (ECB) and the Bank of England (BoE), as well as political events like Brexit. These policies affect the value of the pair by affecting interest rates, and therefore the exchange rate.
Another factor that can move the EUR/GBP price is economic data. This includes inflation, retail sales, industrial production, employment and consumer confidence.
Both the ECB and BoE meet eight times a year to determine monetary policy, and they often announce changes in interest rates. This can cause a significant change in the EUR/GBP exchange rate.