Forex trading involves the buying and selling of one currency against another. The goal is to make a profit from the price differences between the two currencies. However, not all currency pairs behave the same way. Some currency pairs are more volatile than others, meaning they fluctuate more widely in price, while others are more stable, meaning they move only slightly. In this article, we will explore which forex pairs range the most and why.
Firstly, it is important to understand what we mean by “range.” In forex trading, range refers to the difference between the high and low prices of a currency pair over a given period. The wider the range, the more volatile the currency pair is considered to be.
Now, let’s take a look at some of the forex pairs that range the most:
1. GBP/JPY: The British pound/Japanese yen currency pair is known for its high volatility. This is because both currencies are considered to be “riskier” than others. The pound is influenced by Brexit and economic data releases, while the yen is affected by the Bank of Japan’s monetary policy decisions. The combination of these factors makes GBP/JPY one of the most volatile currency pairs in the forex market.
2. EUR/JPY: The euro/Japanese yen currency pair is another highly volatile pair. Like GBP/JPY, both currencies are considered risky, with the euro influenced by political events in the European Union and the yen affected by the Bank of Japan’s policies. EUR/JPY is also influenced by the carry trade, where traders borrow in a low-yielding currency and invest in a high-yielding currency, such as the euro.
3. GBP/USD: The British pound/US dollar currency pair is one of the most widely traded pairs in the forex market. While it is not as volatile as GBP/JPY, it still has a relatively wide range. The pound is influenced by Brexit and economic data releases, while the US dollar is affected by the Federal Reserve’s monetary policy decisions and economic data releases. The combination of these factors can cause significant price movements in GBP/USD.
4. USD/JPY: The US dollar/Japanese yen currency pair is considered to be one of the most popular pairs in the forex market. It is also known for its high volatility, with the yen being a safe-haven currency and the US dollar being influenced by economic data releases and Federal Reserve policy decisions. USD/JPY is also influenced by the carry trade, where traders borrow in a low-yielding currency and invest in a high-yielding currency, such as the US dollar.
5. AUD/JPY: The Australian dollar/Japanese yen currency pair is another volatile pair, influenced by both domestic and international economic events. The Australian dollar is affected by commodity prices, the Reserve Bank of Australia’s monetary policy decisions, and economic data releases. The yen is influenced by the Bank of Japan’s policies and global risk sentiment. The combination of these factors makes AUD/JPY one of the most volatile currency pairs in the forex market.
It is important to note that while these currency pairs are known for their high volatility, they also carry a higher level of risk. Traders should always use proper risk management techniques when trading any currency pair, especially those with wider ranges.
In conclusion, forex pairs that range the most tend to be influenced by a combination of domestic and international economic events, central bank policy decisions, and global risk sentiment. While these pairs offer the potential for higher returns, they also carry a higher level of risk. Traders should always use proper risk management techniques when trading any currency pair, especially those with wider ranges.
