The 4 Most Attractive Currency Pairs In Forex
Before embarking on your quest to reap potential profits, it’s important to become acquainted with key terms and meanings affiliated with Forex trading. They say a little knowledge can go a long way, but when it comes to matters concerning your financial well-being, it’s best to get as clued up as possible. Read widely, follow applicable forums, use demo accounts before committing any real money, and learn before you earn.
Types of currency pairs that you can trade
Forex currency pairs can be segmented into the following categories: Majors, Minors and Crosses. Majors are the most popular of the lot and will always include the US dollar. Of the three categories, majors carry the most liquidity. However, due to their popularity status, competition when trading is rife. When it comes to minors, the US dollar is excluded although allowances for one of the other majors is made – the Euro for instance. Minors have less liquidity and trading data on the subject is more limited, which in turn makes for a less competitive market. Crosses don’t include the US dollar in their pairings. Unlike a minor, which is still required to have a major, a cross can be made up of any non-US dollar currency.
Currency pairs to trade
1. USD to EUR
In short, USD to EUR is another way of saying “conversion of United States dollars to euros.” This currency pair is by far one of the most traded. An industry deeply entrenched in this currency paring is the US winery whose exports to Europe and the profitability thereof is dependent on this currency pairing. The USD/EUR is susceptible to political activities which in turn can affect how the one performs against the other.
2. USD to JPY
As the official currency of Japan, the Japanese yen dates all the way back to the Meiji aspirations of westernising the Japanese economy. After World War II the yen devalued considerably and only started stabilizing after the 1973 oil crisis. The yen’s strength as a reserve currency puts it in 4th position after the USD, the Euro, and the GBP. The Japanese government devotes vast resources to maintaining a low value yen for the purposes of a competitive export market. Daily fluctuations translates into volatility and thus large profits if you buy when the time is right.
3. USD to CAD
America’s economic partnership with Canada is a deeply entrenched one, and hence it should come as no surprise that the values of both the CAD and USD are closely linked. The Canadian dollar is also viewed as a commodity currency, mainly due to the country’s reliance on oil exports. If you’re trading with USD CAD Forex pairs, then it would be highly recommended that you observe the price of oil in order to determine the right time to buy.
4. USD to GBP
As the official currency of the United Kingdom, the British pound sterling is used within the confines of England, Scotland and Wales. During its time as part of the EU and subsequent to its departure, the UK has maintained its use of the pound. After the vote on Brexit was passed back in 2016, the GBP declined by 10% overnight and a further 20% over the course of a few months – a far cry from its 2007 all-time high of £2.10 per $1 USD. Despite recent setbacks, the GBP remains the third most-traded currency after the USD and the EUR.