What are the major currency pairs in forex, and why are they important?

The major currency pairs in forex always involve the US Dollar (USD) and include pairs like EUR/USD, GBP/USD, and USD/JPY. They are important due to their high liquidity, low spreads, and low volatility, making them ideal for traders.

Currency prices fluctuate due to factors like economic data, interest rates, geopolitical events, market sentiment, and speculation. Key drivers of major price moves include changes in economic indicators, central bank policies, global events, and large institutional trades.

To choose the right currency pair, consider your trading style, market conditions, liquidity, and volatility. For example, if you’re focused on US data, trade pairs with USD; if you prefer short-term trades, choose highly liquid major pairs; and if you like higher volatility, consider exotic pairs.

Beginners should focus on major currency pairs like EUR/USD, GBP/USD, USD/JPY, and AUD/USD, as they offer high liquidity, tight spreads, and lower volatility. These pairs also have abundant educational resources and analysis available.

Currency pairs with USD (e.g., EUR/USD, GBP/USD) are more liquid, stable, and have tighter spreads due to the US Dollar’s dominance in global trade. Pairs without USD (e.g., EUR/GBP, GBP/JPY) tend to have higher spreads, lower liquidity, and greater volatility, influenced more by local economic conditions.

Currency pair volatility is influenced by factors like economic stability, interest rates, market sentiment, and liquidity. Currencies from unstable economies, higher interest rates, or lower liquidity (e.g., exotic pairs) tend to be more volatile.

Currency pairs are classified as major, minor, and exotic based on liquidity and trading volume. Major pairs involve the US Dollar and are the most liquid (e.g., EUR/USD), minor pairs don’t involve the USD but include other major currencies (e.g., EUR/GBP), and exotic pairs involve a major currency and a currency from a developing economy, […]

Currency pairs are quoted with the first currency (base currency) representing one unit, and the second currency (quote currency) showing how much of it is needed to buy one unit of the base. For example, in EUR/USD = 1.20, 1 Euro is worth 1.20 US Dollars.