The high daily volume of EUR/USD transactions ensures that the pair has a lot of liquidity, which generally results in tight spreads. The most commonly traded fx pair is the EUR/USD, accounting for 22.7% of global forex turnover. The third most traded currency pair is the GBP/USD, which accounts for 9.5% of turnover. This pair signifies the exchange rate between the US dollar and the Japanese yen.
EUR/JPY (Euro/Japanese Yen)
- Offshore regulators are generally less stringent than the stricter, top-tier regulators, yet the regulatory environments can vary significantly between different countries.
- Another major reserve currency, the euro, secured the second place across this metric with a 14.6% share and $616 billion in average turnover per day as of April 2022.
- Inflation and GDP tend to strongly influence the pound, but the housing market is also important for the British currency.
This is useful for businesses, investors, and traders who need to make international payments, hedge against currency risk, or speculate on currency movements. The pairing of the euro and the British pound in the EUR/GBP pair is often seen as one of the most difficult pairs to make accurate price predictions for. This is because EUR and GBP have had a historical link given the proximity of the UK to Europe and the subsequent strong trade ties between these two economies. The USD/CHF currency pair is made up of the US dollar and the Swiss franc and is commonly known as the ‘Swissie’. USD/CHF is a popular currency pair because the Swiss financial system has historically been a safe haven for investors and their capital.
Global Liquidity in 2025
It’s a general rule that the US dollar normally weakens when the price of oil increases, because if the dollar is weaker, more US dollars must be converted into other currencies to buy the same amount of oil as before. A slump in the value of these commodities on the world market would likely cause a reciprocal slump in the value of the Australian dollar. In the case of the AUD/USD currency pair, this means the US dollar would become stronger, so it would cost fewer US dollars to buy one Australian dollar. However, the quality and effectiveness of financial regulation can vary significantly between different mid-tier regulators, and forex traders should always conduct research before choosing a forex broker.
Interesting Facts About Forex Currency Pairs
It’s popular among traders for the economic significance of the Eurozone and Japan and the liquidity it offers. In recent years, this currency pair has fluctuated in price quite unpredictably – primarily due to the uncertainty surrounding Brexit and then the pandemic. The high level of volatility can be attractive to traders, but it is important to have a risk management strategy in most traded currency pairs 2020 place before opening a position in a volatile market. As with most other currency pairs, the strength of GBP/USD comes from the respective strength of the British and American economies.
Trading
A significant drop in both volume and market share, possibly due to economic instability in Turkey. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider.
Outright forwards placed third with a 15.5% share, followed by forex options with 4.1% and currency swaps with 1.7%. Here is a more detailed breakdown of the turnover each instrument generated. As the currency of the second biggest economy on the planet, the yuan plays a vital role in the global financial markets. It is commonly traded against the currencies of other strong economies like the EU, the US, the UK, and Australia through majors and crosses like the EUR/CNY, USD/CNY, GBP/CNY, and AUD/CNY.
The fundamental factors that influence the euro’s prices are often based on the well-established economies that use the common currency, such as France and especially Germany. The main factors that affect the euro’s performance are consumer price inflation and the interest rate set by the European Central Bank. Euro countries’ export indicators and unemployment rates also tend to have an impact on the common currency’s performance, since countries like Germany are major exporters of manufactured goods and technology. Europe remains dependent on energies such as Russian gas and oil from the Middle East, so higher demand for these products has a negative effect on the European currency. The euro is by far the latest currency on the forex market – it replaced the German deutschmark, which accounted for 25% of forex transactions before the creation of the euro.
Out of the twenty most heavily traded currency pairs in 2022, the USD/CNY witnessed the most significant growth as its average daily turnover soared by 83% over this three-year period. As the graph above reveals, the relative ranking of the most traded currency pairs did not change significantly in 2022. As in previous years, the EUR/USD retained its dominance in the forex market, placing first in terms of average daily trading volume.
- In terms of age, forex traders are perhaps younger than you’d expect – 27% of forex traders fall into the age group.
- The strength of the Chinese renminbi can also have an effect as China is a key competitor in manufactured goods.
- You will perhaps find it surprising but certain fiat currencies outshine the greenback in value.
- The United States dollar (USD) is the most commonly traded currency in the world, and therefore most major forex pairs include the USD as the base or quote currency.
- These fluctuations not only highlight the pandemic’s role in driving trading activity but also pose questions about market dynamics in a post-pandemic world.
According to the most recent edition of Investment Trends, Australia has the largest penetration of CFD/FX trading in the world on a per-capita basis. In 2021, over 100,000 Australians executed one or more FX or CFD transactions. There are also the most forex brokers in Australia based on a per capita basis. Established in 2009 and regulated by ASIC, CySEC, and the FCA, XM is a no dealing desk broker that has gained traction in the forex trading community. The online broker is known for its no requotes policy and fast execution speeds. The CNY has been the star performer, skyrocketing its share from just 0.9% in 2010 to 7.0% in 2022, marking a staggering 677% increase in its forex market share.
Did COVID Increase the Global Interest in Forex Trading?
The US dollar traded against the currencies of emerging market economies (EME) accounted for 13.8% of the market’s average turnover per day. The currency pair USD/HKD has seen a significant rise in trading volume due to turbulence in Hong Kong. A currency pair is the exchange rate between two currencies, where one currency is the base currency and the other is the quote currency. The base currency is always the first currency in the pair, and the quote currency is the second currency. For example, in the EUR/USD currency pair, the euro is the base currency, and the US dollar is the quote currency.
