The Forex (or foreign exchange) market is overflowing with opportunities- its liquidity and quickness give a good deal of profitability and growth.
If you intend to start your trading journey, first understand what is forex trading and which currency pairs are most profitable and accessible. Here’s a detailed overview of some of the most favourable currency pairs that you (as a beginner) can trade in.
- EUR/USD (EURO/US Dollar)
It is the most widely traded currency pair in the world and contributes a large percentage of transactions in the forex market on a daily basis. The Euro is an equivalent of the Eurozone, whereas the US dollar is a major global reserve currency.
Want to know what the traders find so attractive about this pair? It’s liquidity with spreads tending to be lower. This pair may have a strong influence of economic indicators that are released by the European Central Bank, as well as the Federal Reserve.
- USD/JPY (US Dollar/Japanese Yen)
The USD/JPY pair is known for its volatility and strong trends and is popular among traders seeking to take advantage of the price swings. This currency pair is highly affected by the monetary policy of the Bank of Japan.
That’s what people who are capable of examining the effects of changes in interest rates and economic reports presented by both Japan and the U.S choose this pair. Its liquidity makes it suitable for both short-term and long-term trading plans.
- GBP/USD (British Pound/US Dollar)
Often called Cable, this currency pair is historically characterised by volatility, and it may exhibit extreme price swings. Economic indicators of both countries affect the exchange rate between the British pound and the US dollar.
One of these indicators includes economic conditions in the US and the UK, including GDP growth and unemployment rates in the UK. This pair provides a chance to traders who are eager to analyse geopolitical events and how they affect currencies.
- AUD/USD (Australian Dollar/US Dollar)
Because the Australian dollar is a commodity currency, it responds to commodity prices, especially those of gold and iron ore. The AUD/USD is popular amongst participants interested in the economic prospects of the Asia-Pacific region.
Traders often look for correlations between commodity price movements and this pair, making it a distinctive option for them to incorporate economic analysis into their trading strategy.
- USD/CAD (US Dollar/Canadian Dollar)
The USD/CAD pair is influenced by the economic ties between the U.S. and Canada, and there is a specific correlation with oil prices as Canada is also a major oil exporter.
This connection presents traders with exclusive opportunities, particularly when tracking energy sector developments. Investigation of economic indices like the interest rate decisions of the Bank of Canada could give you an idea of what the market will do next.
Final Verdict
Learning these profitable forex pairs allows newcomers to create a foundation for their forex trading adventure. Remember, the forex market requires careful analysis and strategic planning to make informed trading decisions. So, make yourself empowered and then start your trading journey.
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