Top 10 Most Traded Currencies Pairs In The World

Forex is the world's largest and most volatile market, offering hundreds of currency combinations. Forex pairs explained when you buy or sell one currency, you automatically buy or sell another. This is why currencies are always traded in pairs. There is a base currency and a quote currency in every currency pair, the base currency is shown first, and the quote currency is shown to the right of it. The amount of the quote currency you will need to spend to purchase one unit of the base currency is what is shown in the price of a currency pair.

For instance, the EUR/USD currency pair has USD as its quote currency and EUR as its base currency. One euro is equivalent to 1.20 US dollars if the quote price is 1.2000. The base currency is the first currency listed in a currency pair, and the quote currency is the second. Different kinds of forex pairs In general, there are three types of forex pairs. The majors, commodity currencies, and cross currencies are as follows:

Most Traded Currencies Pairs In The World 2023

• EUR/USD (euro/US dollar)
• USD/JPY (US dollar/Japanese yen)
• GBP/USD (British pound/US dollar)
• AUD/USD (Australian dollar/US dollar)
• USD/CAD (US dollar/Canadian dollar)
• USD/CNY (US dollar/Chinese renminbi)
• USD/CHF (US dollar/Swiss franc)
• USD/HKD (US dollar/Hong Kong dollar)
• EUR/GBP (euro/British pound sterling)
• USD/KRW (US dollar/South Korean won)

1. EUR/USD (euro/US dollar)

The EUR/USD pair has a lot of liquidity because of the high daily volume of transactions, which typically results in tight spreads. Large trades can be made with little impact on the market thanks to liquidity and tight spreads, which attract traders.

The interest rates set by the European Central Bank (ECB) and the US Federal Reserve (Fed) play a significant role in determining the EUR/USD exchange rate. This is due to the fact that the currency with higher interest rates will typically be in greater demand due to the higher return on initial investment. The euro would probably appreciate in relation to the dollar, for instance, if the ECB had set interest rates higher than the Fed.

2. USD/JPY (US dollar/Japanese yen)

The US dollar and the Japanese yen make up the USD/JPY currency pair, which is also known as "the gopher." Similar to EUR/USD, USD/JPY is known for its high liquidity, which comes from the fact that the yen is the most heavily traded currency in Asia and the US dollar is the most commonly traded currency worldwide.1 It is the second most traded forex pair on the market, accounting for 13.2% of all daily forex transactions in 2019.1

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The Bank of Japan (BoJ), like the Fed and ECB, sets interest rates for the Japanese economy, which in turn affects how much the yen is worth in comparison to the US dollar.

3. GBP/USD (British pound/US dollar)

The pound sterling and the US dollar make up this pair of currencies. Due to the deep-sea cables that carried the bid and ask quotes between London and New York, GBP/USD is commonly referred to as "cable." The GBP/USD pair, like the majority of other currency pairs, derives its strength from the respective strengths of the British and American economies, which accounted for 9.6% of all daily forex transactions in 2019.1 The pound will likely appreciate against the dollar if the British economy expands at a faster rate than the American one. However, the opposite is true if the American economy is performing better than the British economy.

The quote price of GBP/USD is influenced by the Bank of England (BoE) and Fed interest rates, just like the first two most popular currency pairs on this list. The subsequent disparity in interest rates between the pound and the dollar may have a significant impact on the GBP/USD currency pair's price.

4. AUD/USD (Australian dollar/US dollar)

AUD/USD The Australian dollar is represented against the US dollar in the AUD/USD currency pair. In 2019, it accounted for 5.4% of daily forex trades1. The value of the Australian dollar is closely linked to the value of the country's exports. Metal and mineral exports like iron ore and coal account for a significant portion of the country's GDP2. A decline in the value of these commodities on the international market would likely result in a decline in the value of the Australian dollar. In the case of the currency pair AUD/USD, this indicates that the strength of the US dollar would reduce the cost of purchasing one Australian dollar.

The difference in interest rates charged by the Reserve Bank of Australia (RBA) and the Federal Reserve of the United States (Fed) has an impact on the AUD/USD exchange rate in a manner that is comparable to that of the currency pairs mentioned earlier. For instance, if interest rates in the United States are low, the dollar would likely appreciate against the Australian dollar, and one American dollar would cost more to buy.

5. USD/CAD (US dollar/Canadian dollar)
 

USD/CAD The currency pair of the United States dollar and the Canadian dollar is referred to as the "loonie" due to the loon bird that appears on Canadian dollar coins. Since oil is Canada's primary export, USD/CAD transactions accounted for 4.4% of daily forex trades in 2019.1 The strength of the Canadian dollar is closely linked to the price of oil.

Canada can earn a significant amount of US dollars from its oil exports due to the fact that oil is priced in US dollars on global markets. As a result, the Canadian dollar's value will likely rise in comparison to the US dollar if the price of oil rises.

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USD/CAD is one of the forex pairs that gets traded the most. When the price of oil goes up, the US dollar usually weakens. If the dollar is weaker, more US dollars have to be converted into other currencies to buy the same amount of oil as before. Due to the close ties between the Canadian dollar and the price of oil, expensive oil, in turn, indicates that the Canadian dollar will likely strengthen.

As a result, when trading USD/CAD, traders should keep an eye on the prices of US crude and Brent crude because any changes in the oil market will likely affect this forex pair's exchange rate.

6. USD/CNY (US dollar/Chinese renminbi)

USD/CNY The USD/CNY currency pair is made up of the US dollar and the Chinese renminbi, also known as the yuan. In 2019, it accounted for 4.1% of daily forex trades1. The yuan has largely fallen in value in comparison to the US dollar since the start of the trade war between the US and China. This is in part because the Chinese government has allowed the yuan to depreciate, knowing that doing so will lower the price of the country's exports and increase their already-large market share in countries other than the United States.

The USD/CNH currency pair can be traded on IG. CNH is the offshore version of the yuan that is traded outside of mainland China. When Yuan is traded on the onshore Chinese market, it is referred to as CNY. The Chinese government has traditionally not exercised as much control over CNH as it does over CNY, which means that it can be more volatile. It might be a better option for speculative trading because of its volatility.

The US-China trade war is something traders should keep an eye on because any developments are likely to have an impact on the price of this currency pair.

7. USD/CHF (US dollar/Swiss franc)

USD/CHF The currency pair known as the "Swissie" is comprised of the US dollar and the Swiss franc. The Swiss financial system has historically served as a safe haven for investors and their capital, making USD/CHF a popular currency pair.

Consequently, during times of increased market volatility, traders frequently turn to CHF, whereas during times of greater market stability, traders typically show less interest in the Swiss franc. As CHF strengthens against the USD following increased investment, it is likely that the price of this pair will decrease during times of increased volatility.

CHF is not traded as frequently as the six other currency pairs on this list because it is used primarily as a safe haven or during times of economic volatility. However, USD/CHF still accounted for 3.6% of all daily forex transactions in 2019.1 The USD/HKD pair pits the Hong Kong dollar against the US dollar. The Hong Kong protests that dominated 2019 may have contributed to the rise in this pair's trading volume, which increased from 1.5% of all daily forex transactions in 2016 to 3.3% in 2019. The Fugitive Offenders Amendment Bill's attempted implementation and allegations of police brutality against Hong Kongers sparked the protests.

8. USD/HKD (US dollar/Hong Kong dollar)

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It is likely that the USD/HKD trading volume was affected by the protests, which began around a month before the data were collected. This could be due, in part, to the fact that the increased buzz in the media caused many traders and speculators to focus on the Hong Kong dollar, assuming that any news from the city would affect its value.

In a unique system known as a linked exchanged rate, the value of the Hong Kong dollar is tied to the value of the US dollar. The Hong Kong dollar can fluctuate anywhere from HK$7.75 to HK$7.85 to US$1, and traders can profit from price fluctuations within this range.

9. EUR/GBP (euro/British pound sterling)

EUR/GBP One of the most challenging pairs to accurately predict prices for is the EUR/GBP pair, which combines the euro and the British pound. This is due to the strong trade ties between these two economies and the close proximity of the UK to Europe, which has resulted in a historical connection between EUR and GBP.

As with the other currency pairs on this list, traders should keep an eye on any ECB and BoE announcements that could affect the exchange rates of the euro and the pound, which would further increase volatility. Despite the alleged difficulties in predicting its movements, EUR/GBP transactions still made up 2.0 percent of daily trades in 2019.

This currency pair's price has fluctuated quite wildly over the past few years, primarily as a result of the uncertainty surrounding Brexit. Traders may find the high level of volatility appealing, but before opening a position in a volatile market, it is essential to have a risk management strategy in place.

10. USD/KRW (US dollar/South Korean won)

The tenth pair on this list is USD/KRW, which compares the US dollar to the South Korean won. This forex pair accounted for 1.9% of daily forex transactions in 2019, marking the first time it has appeared on a list of the top ten most traded currencies1. As of November 2019, the South Korean economy ranked eleventh in the world and fourth in Asia. As traders and speculators seek exposure to an additional important Asian market in addition to Japan, China, and Hong Kong, this could be one reason for the increase in USD/KRW activity.

People often refer to South Korea's economic expansion as the "Miracle on the Han River" because it has been so impressive, especially since the Korean War ended in 1953. South Korea's membership in the G20, the Organization for Economic Co-operation and Development (OECD), and the United Nations make the country and its currency an exciting opportunity for many market participants. This growth is now being capitalized on.

Conclusion Despite the fact that EUR/USD has the highest daily traded volume of all forex pairs, traders still have a number of viable, high-liquidity currency pairs from which to choose in an effort to make a profit. Before selecting a currency pair to trade, traders should consider a number of factors and conduct their own technical and fundamental analysis to determine whether the currency pair is a viable trading option based on announcements from central banks or ongoing trade disputes.