If you’re new to forex trading, you may wonder what the main currency pairs are. The major pairs include the US dollar (USD), the British pound (GBP), the Euro (EUR), and the Swiss franc (CHF). Each pair has a unique set of strengths and weaknesses, and you need to understand each of them in order to succeed.
EUR/USD
EUR/USD is one of the most popular forex currency pairs in the world. In fact, it represents over 20% of all forex transactions around the globe.
The market for this currency pair is dominated by multi-national corporations, who want to buy and sell in the US. Despite its popularity, it can still be volatile.
The Euro is the base currency in the Eurozone, which consists of 19 member states in Europe. Since the Euro is backed by the dollar, a fall in the value of the dollar will reduce the value of the Euro.
This pair is also impacted by a variety of factors, including economic data and political events. However, its long-term performance has been largely attributed to the currency’s fundamentals.
The value of any currency can change rapidly. That is because supply and demand are affected by the economic conditions in each country. Economic indicators, such as GDP, unemployment, and CPI numbers, are released regularly in the U.S. and Europe, and these measures can have a strong effect on the value of any currency.
GBP/USD
The GBP/USD major currency pairs is one of the most liquid and popular pairs in the Forex market. It has been trading for over a century and is widely regarded as a great trading option for retail traders.
There are many factors that influence the currency pair. One of the most important is monetary policy. Central banks such as the Federal Reserve and the Bank of England release interest rates regularly. Traders need to keep an eye on these rates to determine whether it is time to trade.
Political and economic news can also affect the value of the exchange rate. These can range from election results to trade wars and corruption scandals.
If you are trading, you will want to make sure you are monitoring political events both in the United Kingdom and the U.S. This can be very helpful for your success.
As the largest reserve currency, the US dollar is used by organisations and individuals around the world. These include governments, businesses, and individuals.
USD/JPY
The USD/JPY is one of the more widely traded currencies in the world. The pair is influenced by a variety of factors, from the economy of the United States to the Japanese yen. This is why it’s important to understand the factors that have a direct impact on the currency’s price.
For example, in Japan, the yen has a long history as a safe haven. It’s often bought or sold as a replacement for more volatile currencies in the region.
One of the reasons for this is the fact that it’s highly liquid. Because of its low spreads, traders and investors have more opportunities to make profits. However, this isn’t always a positive. Some of the most volatile pairs in the forex market, like EUR/JPY, can put even the most well-funded trader out of business.
Another factor that can affect the USD/JPY’s exchange rate is the Federal Reserve’s and Bank of Japan’s interest rate differential. As US interest rates rise, the dollar becomes more attractive to buyers. Similarly, the yen’s value can depreciate as oil prices climb.
Swiss franc (CHF)
The Swiss franc is the seventh most traded currency in the world. It is considered to be a safe haven during times of uncertainty. However, it is not an official currency in most regions.
Switzerland has one of the most advanced free market economies in the world. Its GDP is estimated at US$750 billion. This makes it the 18th largest national economy by nominal GDP.
It is one of the leading nations in the world in terms of private wealth. The country holds one third of the world’s privately owned wealth in its banks.
The Swiss National Bank (SNB) is the central bank of Switzerland. It sets monetary policy and maintains exchange rates. SNB rate statements provide detailed information on the bank’s monetary policy and the effects on the currency.
Various economic indicators affect the USD/CHF pair. Some of the key economic indicators include industrial production, unemployment, and wage growth. Trade balance, inflation, and retail sales also impact the price.
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