Forex pairs are the basis of the foreign exchange market, where currencies are traded against each other. The term “pip” is a unit of measurement that represents the smallest movement a currency pair can make. Forex traders use pips to measure the profits and losses of their trades. The value of a pip is determined by the currency pair being traded, as different pairs have different exchange rates. In this article, we will explore which forex pairs move the most pips and why.
First, it is important to understand that each currency pair has its own unique characteristics that influence its movement. The factors that impact a currency pair’s movement include economic data releases, geopolitical events, central bank announcements, and market sentiment. However, some currency pairs tend to move more pips than others due to their liquidity, volatility, and trading volume.
The most traded currency pairs in the forex market are the major pairs, which include the US dollar (USD) as one of the currencies. These pairs are highly liquid and account for the majority of trading activity in the market. The major pairs include EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, and USD/CAD.
EUR/USD is the most traded currency pair in the world, accounting for over 20% of daily trading volume. It is also the most liquid and volatile pair, making it a popular choice among traders. The euro and the US dollar are the two largest currencies in the world, and their exchange rate is influenced by a variety of economic factors, such as interest rates, inflation, and GDP growth. The EUR/USD pair is known for its large price swings, with an average daily range of around 80-100 pips.
USD/JPY is the second most traded currency pair, representing around 13% of daily trading volume. The pair is influenced by the monetary policies of the Bank of Japan and the Federal Reserve, as well as economic data from both countries. The USD/JPY pair is also known for its volatility, with an average daily range of around 70-80 pips.
GBP/USD, also known as the “cable,” is the third most traded currency pair, accounting for around 9% of daily trading volume. The pair is influenced by economic data from the UK and the US, as well as Brexit-related news and events. The GBP/USD pair is known for its large price swings, with an average daily range of around 80-100 pips.
USD/CHF is the fourth most traded currency pair, representing around 5% of daily trading volume. The pair is influenced by the monetary policies of the Swiss National Bank and the Federal Reserve, as well as economic data from Switzerland and the US. The USD/CHF pair is known for its low volatility, with an average daily range of around 40-50 pips.
AUD/USD is the fifth most traded currency pair, accounting for around 5% of daily trading volume. The pair is influenced by economic data from Australia and the US, as well as commodity prices and global risk sentiment. The AUD/USD pair is known for its volatility, with an average daily range of around 60-70 pips.
USD/CAD is the sixth most traded currency pair, representing around 4% of daily trading volume. The pair is influenced by economic data from Canada and the US, as well as commodity prices and global risk sentiment. The USD/CAD pair is known for its volatility, with an average daily range of around 60-70 pips.
In addition to the major pairs, there are also minor and exotic currency pairs that are less frequently traded. These pairs can be more volatile and have wider spreads, which can make them more challenging to trade. Some of the most popular minor pairs include EUR/GBP, EUR/JPY, and GBP/JPY. Exotic pairs include USD/MXN, USD/NOK, and USD/ZAR.
In conclusion, forex pairs that move the most pips are typically the major pairs, which are highly liquid and volatile. The movement of a currency pair is influenced by a variety of economic factors, and traders must stay up-to-date on the latest news and data releases to make informed trading decisions. While trading forex can be challenging, understanding which pairs are most likely to move can help traders increase their profits and minimize their risks.
