There are various advantages of trading in the topmost tradable currencies, but before diving into the benefits of these pairs, it is important to understand the pros and cons of each. Among the top tradable currencies are USD, EUR, GBP, AUD, and NZD. These currencies tend to have strong market demand and are likely to remain stable in the near future. For this reason, buyers are generally hesitant to take risks on weaker currencies.
EURUSD
The EUR/USD is the most popular tradable currency pair. It fluctuates depending on several factors, including the interest rates set by the Federal Reserve and the European Central Bank. Both these central banks decide on the Federal Funds rate eight times a year. Their accompanying statements provide clues about their future policy actions. The EUR/USD is also affected by economic data from both the US and Europe, including unemployment figures.
This is one of the most liquid pairs in the forex market, and traders can use this to their advantage by taking advantage of price levels. Identifying important support and resistance levels is important when preparing a trading strategy. Breakouts indicate a new rally higher or a sharp fall. Traders who are able to spot these events will have great success. You can learn about them by using the Forex calendar.
USD/JPY
In addition to being one of the topmost tradable currencies, the USD/JPY pair has its fair share of risks. The price of the USD can rise drastically if the Japanese economy is weak or fall rapidly when the US economy is strong. The currency pair is prone to volatility because the Japanese Central Bank can intervene to protect their economy from deteriorating economic conditions. Furthermore, there are a number of unpredictable events that can affect the USD/JPY exchange rate, such as natural disasters.
The USD/JPY pair is a popular choice among currency traders, thanks to its low spreads and massive liquidity. Moreover, the yen of Japan has proved to be a safe haven currency in the past, making it the third-largest in the world. This pairing plays an important role in Asian markets, where JPY is commonly purchased and sold as a safe haven currency during economic downturns.
GBP/USD
The GBP/USD, forex trading pair is affected by several factors and events, including US and UK economic indicators, political and social events, and global news. The incoming US president and the UK prime minister are all potential factors that could influence the trading price.
When trading in the GBP/USD currency pair, remember to always check the pips. The GBP/USD exchange rate fluctuates by a few pips. You can use your best trading account to identify the best times to buy and sell currency pairs. You can also use a trading platform to buy and sell currencies. To make the most of your trading experience, try to get a trading account that allows you to manage multiple currencies simultaneously.
AUD/NZD
AUD/NZD is a highly tradable currency pair between two countries – Australia and New Zealand. Both are major trade partners. While the Australian and New Zealand currencies tend to rise and fall in tandem, there are some differences between the two. The AUDNZD is highly dependent on economic data and local factors – monetary policies, interest rates, and crop planting are all of the utmost importance.
The AUD/NZD is largely driven by commodity prices. It is the world’s third-largest gold producer, so international gold prices are a key factor affecting the value of the AUD. Other commodities also influence exchange rates in both countries. New Zealand, on the other hand, has a thriving agricultural sector and abundant natural resources. Dairy products make up twenty-four percent of the nation’s gross domestic product, making them a key source of export revenue.
CAD/NZD
Compared to other tradable currencies, the USD/NZD currency pair has the largest range. This volatility makes many traders wary of trading the pair because it can fluctuate wildly. However, NZD/CAD is the topmost traded currency pair for a reason – it exhibits a negative correlation with the major crosses. If you’re looking for a safe haven currency to invest in, NZD/CAD is the top choice.
The NZD/CAD currency pair’s volatility is low and irregular, so it’s easy to predict its movements. Most NZD/CAD movements are linked to commodity prices, including the price of crude oil. On the other side, the NZD is a carry trade currency, which means that its value fluctuates according to the economic metrics of the countries to which it is pegged. For example, NZD is the world’s leading exporter of whole milk powder.
NZD/USD
NZD/USD is among the most heavily traded currency pairs on the forex market. The currency pair’s name indicates how many US dollars it takes to purchase one New Zealand dollar. The NZD is a commodity currency; its exports consist largely of raw materials. It has historically been a vehicle for carry traders as it is highly sensitive to changes in interest rates. Consequently, it has historically been the best pair to trade for a trader who is new to currency trading.
The NZD/USD is particularly suited for carry trades, which involve selling one currency and investing the proceeds in a higher-yielding currency. Carry trade profits are realized through interest rate differences and exchange rate fluctuations. The currency pair’s hawkish monetary policy is a major driver of NZD/USD carry trades. Traders can make a profit from both a sell or buy decision by taking advantage of the currency’s high-interest rate.
