Major Pairs – Capitalco.net

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Major Currency Pairs

What Are Major Pairs ?

The major pairs are the seven most actively traded currency pairs in the Forex market. In currency trading, the most economically and politically stable liquid currencies are represented by the EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, NZD/USD and AUD/USD.

Key Takeaways

✓ The major currency pairs on the forex market are the EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, NZD/USD and AUD/USD.
✓ The EUR/USD is by far the most heavily traded currency pair in the world and is popular among traders due to its large daily volume.
✓ The EUR/USD is the world’s most heavily traded currency pair, representing more than 20% of all forex transactions.
✓ These seven major currency pairs are deliverable currencies and are part of the G10 currency group.

Understanding the Major Pairs

All of the primary currency pairs contain the USD. The major pairs are considered drivers of the global forex market. In general, there are eight most traded currencies – the U.S. dollar (USD), the euro (EUR), the Canadian dollar (CAD), the Japanese yen (JPY), the British pound (GBP), the Australian dollar (AUD), the Swiss franc (CHF), and the New Zealand dollar (NZD).

How Are Prices of the Major Pairs Determined ?

The currencies of the major pairs are all free floating. Their prices are determined by money supply and demand. Central banks step in to control the national currency price if that is necessary to prevent the price fluctuations from high rising or falling causing economic turmoil.

Supply and demand are affected by economic health and fundamental conditions in each country, interest rates, future expectations and current positions for the country’s currency.

The Bottom Line

The major pairs have high trading volume and liquidity. They thus tend to have smallest spreads attracting traders and institutions, which keeps the volume high.

An example, the price for the EUR/USD is 1.15, which means it costs $1.15 to buy €1. If the rate moves up to 1.20, that means the euro has increased in value because it now costs more dollars, $1.20 to buy €1.