Forex trading is a global market that deals in currency trading. It is the largest financial market in the world, with daily trading volumes of over $6 trillion. The forex market is open 24 hours a day, five days a week, and is accessible to everyone from small retail traders to large financial institutions.
One of the most important aspects of forex trading is understanding the major currency pairs. A currency pair is a combination of two currencies that are traded against each other in the forex market. The four major currency pairs are the EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
1. EUR/USD
The EUR/USD currency pair is the most traded pair in the forex market. It represents the euro and the US dollar, and is referred to as the “eurodollar.” The euro is the currency of the European Union and is used by 19 countries. The US dollar is the currency of the United States and is the world’s most widely used currency.
The EUR/USD pair is heavily influenced by the economic and political events in the European Union and the United States. The European Central Bank (ECB) and the Federal Reserve (Fed) are the two central banks that have a major impact on this currency pair. The EUR/USD pair is also affected by the performance of the stock markets in both regions.
2. USD/JPY
The USD/JPY currency pair is the second most traded currency pair in the forex market. It represents the US dollar and the Japanese yen. The Japanese yen is the currency of Japan and is known as a “safe haven” currency. The US dollar is the world’s most widely used currency.
The USD/JPY pair is heavily influenced by the economic and political events in the United States and Japan. The Federal Reserve and the Bank of Japan are the two central banks that have a major impact on this currency pair. The USD/JPY pair is also affected by the performance of the stock markets in both regions.
3. GBP/USD
The GBP/USD currency pair is also known as the “cable” and represents the British pound and the US dollar. The British pound is the currency of the United Kingdom and is one of the oldest and most widely traded currencies in the world. The US dollar is the world’s most widely used currency.
The GBP/USD pair is heavily influenced by the economic and political events in the United Kingdom and the United States. The Bank of England and the Federal Reserve are the two central banks that have a major impact on this currency pair. The GBP/USD pair is also affected by the performance of the stock markets in both regions.
4. USD/CHF
The USD/CHF currency pair represents the US dollar and the Swiss franc. The Swiss franc is the currency of Switzerland and is known as a “safe haven” currency. The US dollar is the world’s most widely used currency.
The USD/CHF pair is heavily influenced by the economic and political events in the United States and Switzerland. The Federal Reserve and the Swiss National Bank are the two central banks that have a major impact on this currency pair. The USD/CHF pair is also affected by the performance of the stock markets in both regions.
In conclusion, the four major currency pairs are the EUR/USD, USD/JPY, GBP/USD, and USD/CHF. These currency pairs are heavily traded in the forex market and are influenced by economic and political events in their respective countries. Understanding these currency pairs is essential for forex traders to make informed trading decisions.
