The U.S. dollar dominated the list of the most traded currency pairs in 2020, being involved all of the top seven. The most common forex transaction in that year was the euro and the U.S. dollar, which account for almost 28 percent of all currency exchanges. This was followed by the U.S. dollar and the yen, then the U.S. dollar and the British pound. The most common pair excluding the U.S. dollar was the euro and the yen, which accounted for less than four percent of all trades. Firstly, the US is the world’s largest economy and a powerhouse in international trade.

According to the BIS data, a total of 88 percent of all transactions include the American currency. The dollar is such an important fixture in the world that there is a gigantic financial market that deals with just US dollars outside the USA. The USD remains the world reserve currency and the largest commodities in the world such as crude oil and gold are primarily priced in dollars.

This is because a liquid market with supply/demand at every price level will ensure price action is smooth and gap-free. Issued by the Bank of England, the Pound is an iconic currency that plays an integral part within London’s institutional forex trading Hub. The United States of America is the world’s largest economy, and USD price largely hinges on economic performance back home. Hypothetically, we can assume that the SZL/VUV (the Eswatini Lilangeni/the Vanuatu Vatu) pair may be the world’s least traded. We can also say the same for hundreds of other extremely exotic pairs. However, it’s impossible to determine exactly which one is traded the least.

It is an arrangement for the buying, selling, and redeeming of obligations in foreign currency trading. There are two main foreign exchange markets—interbank and autonomous—in developing economies. Deutsche Bank holds the bank accounts for many corporations, giving it a natural advantage in foreign exchange trading. Foreign exchange trading has emerged as an important center for bank profitability.

To simplify things, here are the ten most traded forex pairs on the market. Although the foreign exchange market is often billed as a banker’s game, currencies can sometimes be a great way to diversify a portfolio that might have hit a bit of a rut. It’s a market that can also offer tremendous opportunities when other global forums enter the doldrums. Quite often, countries will fix their currencies to the U.S. dollar to stabilize their exchange rates rather than allowing the free markets to drive the currency’s relative value.

So for example, going long or ‘buying’ EUR/USD means you’re buying the euro and selling the US dollar. Going short means that you’re ‘selling’ the Euro and buying the US dollar. All currency pairs are quoted in terms of one currency versus another. Next to the US Dollar, the South African Rand, Nigerian Naira, and others, the Kenyan Shilling is one of the most traded currencies in Africa. The value of the euro is largely influenced by the political and economic developments in the eurozone.

Australian Dollar Fact Sheet

Was an official member of the European Union, the country never adopted the euro as its official currency for a variety of reasons, namely historic pride in the pound and maintaining control of domestic interest rates. The official currency of the majority of the nations within the eurozone, the euro was introduced to the world Python Math Library markets on Jan. 1, 1999, with banknotes and coinage entering circulation three years later. We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders. We’re also a community of traders that support each other on our daily trading journey.

The term Kiwi is in reference to the small, flightless, native bird in New Zealand, called the Kiwi bird. China, for instance, has long had its currency, the yuan or renminbi, pegged to the dollar, much to the disagreement of many economists and central bankers. According to the International Monetary Fund, the U.S. dollar is the most popular.

Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.Please click here to view our Risk Disclosure. As an example of the American Dollar’s supremacy, a few nations besides the U.S. use the U.S. Dollar as their official currency, such as El Salvador, Panama and Ecuador. These sale desks intermediated 77% of all currency trading in April 2016, according to BIS statistics. Open a live account to start trading straight away or practice first with virtual funds on our demo trading account.

The offers that appear in this table are from partnerships from which Investopedia receives compensation. Investopedia does not include all offers available in the marketplace. The U.S. dollar also may be widely accepted in other nations, acting as an informal alternative form of payment, while those nations maintain their official local currency. Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California life, accident, and health insurance licensed agent, and CFA.

Headed by the governor, the bank’s board is made up of six members-at-large, in addition to a deputy governor and the Secretary to the Treasury. Together, they work toward to target inflation between 2% and 3%, while meeting eleven times throughout the year. Announcing policy at least eight times a year, the MPC decides on interest rates and broader monetary policy, with primary considerations of total price stability in the economy.

What are the major currency pairs?

The AUD-USD trading pair now accounts for 6.37% of global forex volume, beating the dollar pairings for both the Swiss Franc and the Canadian Dollar. The yen is also well known in forex circles for its role in the carry trade . The euro may be the most “politicized” currency actively traded in the forex market.

And it is not surprising since the economies of the US and the European Union are the largest ones. The euro is the official currency of the European Union and the second most traded globally, accounting for a daily average volume of nearly US$1.1 trillion.1 It is issued by the European Central Bank . CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Although it is one of the most stable currency pairs to trade and therefore offers many benefits. However, when the markets are in a more stable position, the USD/CHF may be of less interest to traders who opt for other major currency pairs that are featured on this list. The United States has the largest economy globally, and the US dollar is the most traded currency. It comprises major forex pairs and accounts for a significant number of foreign exchange transactions expected on forex brokers like Oanda. The dollar is sometimes regarded as the global reserve currency because it is held by nearly every central bank and institutional investment entity in the world.

Foreign Exchange Market

Choose which currency pair you would like to trade, either from our most traded currency pairs list or a more exotic pair. This means that while there is a chance of maximising profits, there is an equal chance of losses, as traders are only required to place a percentage of the full trade value, known as a margin requirement. This article is a guide to some of the most popular forex pairs to trade right now. ​​ is open 24 hours a day, from Sunday evening until Friday night, which takes advantage of the international time zone differences of London, Tokyo and New York.

We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. Slava Loza Forex Trader & Analyst More than 50% of trades in the Forex market somehow involve the US dollar. The value of NZD is strongly dependent on New Zealand’s trading relationships, the value of the country’s imports and exports, and the strength of trading partners’ currencies. Its main exports are agricultural products – particularly dairy and meat products – while its main imports are oil, machinery and cars. Much like Australia, Canada is rich in natural resources and a major exporter of commodities, which means their prices can be a critical factor in determining CAD’s value.

Of retail investor accounts lose money when trading CFDs with this provider. This method focuses on the rate differential between the 2 currencies with the aim of making profits based on said difference, as opposed to trying to get the best entry and exit points possible. Even though the country has very high debt levels and no longer has a high growth economy, Japan seems to provide more stability than the majority of the other world economies. When you stop and think of all the companies, governments, banks and individuals that need foreign currency you start to understand the scale of it.

It is often argued that the top traded pairs are also the most predictable ones. The euro’s value is strongly influenced by political and economic developments within the bloc. Events that can have an effect include ECB meeting announcements, gross domestic product releases, employment data, national and EU-wide elections, among others included on our economic calendar. In the trading world, in general, safe havens also refer to currencies, commodities, and stocks. For example, Gold is considered a safe-haven commodity to trade as it has a long-term value.

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As a result, commodity prices and global demand strongly influence the price of the Aussie. According to the Bank for International Settlements, the Aussie Dollar is the 5th most traded currency in the world, mostly via the AUD/USD currency pair. According to the Bank for International Settlements, the Euro accounts for a daily average volume of upwards of $800 million. However, the fact they denominate volume in USD highlights the Euro’s number 2 status. The official currency of the United States of America, the US Dollar, is also the world’s primary reserve currency.

Use easyMarkets unique risk management tools like dealCancellation, Freeze Rate and guaranteed stop-loss. Another condition offered as a standard feature on easyMarkets accounts, this ensures you are protected when you trade. Trades are executed at the rate you see, on easyMarkets platforms ensuring you will never be surprised by a spread change during volatility.

You will notice that all of these “Majors” are made up of individual currencies relative to the US Dollar. The US Dollar, Euro, Yen and the other popular currencies combine as pairs to make the Majors, as described earlier in the guide. To see a full list of currency pairs that we offer, along with their minimum spreads and margin rates, visit our page on forex trading​​. In recent years, this currency pair has fluctuated in price quite unpredictably – primarily due to the uncertainty surrounding Brexit.

As of the fourth quarter of 2019, it makes up over 60% of all known central bank foreign exchange reserves. That makes it the de facto global currency, even though it doesn’t hold an official title. This may come as a surprise to many as Australia only boasts a population shooting star trading of roughly 25 million people, but this country is a major market trading hub of Asia Pacific. The Aussie comprised 7% of the total currency trading transactions in 2019. This was the same number as in 2016 while 2013 saw a total of 9 percent of the trading volume.

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For example, during financial turmoil like the financial crisis of 2008, while many currencies were depreciating, the Japanese yen rose by almost 20%. However, despite its safe-haven status, the yen has at times experienced depreciation. The Australian Dollar was introduced in 1966 to replace the Australian Pound and is the currency of the Australian liteforex broker Commonwealth . Today, the Australian Dollar is one of the most traded currencies globally . The Australian economy is a large producer and exporter of raw materials, including Iron Ore, Coal, Petroleum Gas, Gold and Aluminium Oxide. For this reason, like the Canadian Dollar, the Australian Dollar is referred to as commodity currency.

The value of the Hong Kong dollar is pegged to the US dollar in a unique system known as a linked exchanged rate. The Hong Kong dollar is allowed to fluctuate within a band of HK$7.75 to HK$7.85 to US$1, and traders can take advantage of any price movements within this band. Traders should keep an eye on the US-China trade war as any developments are likely to affect the price of this currency pair. Since oil is priced in US dollars on the world markets, Canada can earn a large supply of US dollars through its oil exports.

No, exotic pairs are not exotic belly dancers who happen to be twins. Liquidity is used to describe the level of activity in the financial market. Forex trading is the simultaneous buying of one currency and selling another. Our gain and loss percentage calculator quickly tells you the percentage of your account balance that you have won or lost. Find the approximate amount of currency units to buy or sell so you can control your maximum risk per position. From basic trading terms to trading jargon, you can find the explanation for a long list of trading terms here.

A weak renminbi can make China’s exports more competitive internationally, reducing demand for Japanese products and, in turn, the yen. Finally, it is worth noting that the cost of oil can play an important role in determining the yen’s value. This is because Japan is a major importer of oil and high prices can weigh heavily on its economy. These countries include Ecuador, Panama and El Salvador, among others.

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Some currency pairs are more liquid than others, which in theory makes them easier to trade. It also means that highly liquid instruments are generally more heavily traded. Below you will find information on the most popular currency pairs with the highest trading volumes. The US Dollar is the primary reserve currency globally and dominates international trade. The supply of US Dollars is controlled by the US central bank, the Federal Reserve.

The currency is likely to appreciate when interest rates are relatively high compared to those on offer in other countries, and depreciate when they are relatively low. Turnover in HKD doubled between April 2016 and April 2019, taking the currency from 13th in the global rankings to ninth. This increase in trading volume is likely the result of the uncertainty surrounding the political situation in Hong Kong, which has increased the volatility of HKD pairs and created opportunities for profit. Its exchange rate is fixed at around HK$7.80 to US$1, with the three authorised banks having to deposit dollars with the HKMA when they issue bank notes to keep its price close to this level. The yen’s value is highly dependent on the strength of Japan’s economy, particularly its manufacturing sector which is responsible for key exports including vehicles, electronics, machine tools, ships and textiles.

Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. The pairing of the euro and the British pound in the EUR/GBP pair is often seen as one of the most difficult pairs to make accurate price predictions for.

Jiwon Ma is a fact checker and research analyst with a background in cybersecurity, international security, and technology and privacy policies. Before joining Dotdash, she consulted for a global financial institution on cybersecurity policies and conducted research as a Research Analyst at the Belfer Center for Science and International Affairs. GBP is the abbreviation for the British pound sterling, the official currency of the United Kingdom and its territories.