What Are the Major and Famous Currency Pairs in Forex?

The foreign exchange market, or Forex, is the largest and most liquid financial market in the world, with daily trading volumes exceeding $7 trillion. At its core, Forex trading involves the exchange of one currency for another, expressed in currency pairs. Every Forex transaction involves two currencies: one being bought and another being sold. Understanding these pairs is the foundation of successful trading.

Among the thousands of possible combinations, certain currency pairs dominate global trade due to their liquidity, stability, and global economic influence. These are known as the major currency pairs, and they account for the majority of all Forex transactions.

This article explores what currency pairs are, the difference between major, minor, and exotic pairs, and dives deep into the most famous and actively traded currency pairs in the Forex market.

Understanding Currency Pairs

In Forex, currencies are always quoted in pairs because trading one currency means simultaneously buying another. A currency pair is expressed as:

Base Currency / Quote Currency

For example, in the pair EUR/USD, the Euro (EUR) is the base currency and the U.S. Dollar (USD) is the quote currency. The exchange rate tells you how much of the quote currency (USD) is needed to purchase one unit of the base currency (EUR).

For instance, if EUR/USD = 1.1000, it means 1 Euro = 1.10 U.S. Dollars.

• If you believe the Euro will strengthen against the Dollar, you buy (go long) EUR/USD.

• If you believe the Euro will weaken against the Dollar, you sell (go short) EUR/USD.

Categories of Currency Pairs

Forex pairs are generally divided into three main categories:

1. Major Pairs – Always include the U.S. Dollar (USD) and one other major global currency.

2. Minor (Cross) Pairs – Do not include the USD but involve other major currencies.

3. Exotic Pairs – Combine a major currency with a currency from an emerging or smaller economy.

Let’s explore each briefly.

1. Major Currency Pairs

These are the most traded pairs in the Forex market. They are characterized by high liquidity, tight spreads, and lower volatility compared to other pairs. Each major pair includes the U.S. Dollar (USD)—the world’s reserve currency—along with another major global currency such as the Euro, Yen, Pound, or Swiss Franc.

2. Minor or Cross Currency Pairs

Minor pairs, often called “crosses,” do not include the USD. Examples include EUR/GBP, EUR/JPY, and GBP/JPY. Although these pairs can be liquid, they generally have wider spreads and slightly less trading volume compared to major pairs.

3. Exotic Pairs

Exotic pairs combine a major currency with one from a smaller or emerging market economy, such as USD/TRY (U.S. Dollar/Turkish Lira), USD/ZAR (U.S. Dollar/South African Rand), or EUR/THB (Euro/Thai Baht). These pairs tend to have lower liquidity, higher spreads, and greater volatility, making them more suitable for experienced traders.

The Major Currency Pairs in Forex

There are seven universally recognized major currency pairs, often referred to as the “majors.” They include the U.S. Dollar paired with the other most heavily traded global currencies.

1. EUR/USD (Euro / U.S. Dollar) – “The Fiber”

The EUR/USD is the most traded currency pair in the world, accounting for nearly 30% of daily Forex volume. It represents the economies of the Eurozone and the United States, the two largest economic regions globally.

Why it’s famous:

• Extremely high liquidity and tight spreads.

• Influenced by major economic data such as U.S. GDP, European Central Bank (ECB) interest rates, and Federal Reserve policies.

• Often seen as a barometer for global economic health and U.S. dollar strength.

Key factors affecting EUR/USD:

• Differences in interest rates between the ECB and the Federal Reserve.

• Economic indicators like inflation, employment, and trade balances.

• Geopolitical events within the Eurozone.

2. USD/JPY (U.S. Dollar / Japanese Yen) – “The Gopher”

The USD/JPY is one of the oldest and most actively traded pairs, representing the U.S. and Japanese economies. Japan’s Yen is often considered a safe-haven currency, meaning it tends to strengthen during global uncertainty.

Why it’s famous:

• Highly liquid with consistent trading volume.

• Sensitive to interest rate differentials between the Federal Reserve and the Bank of Japan.

• Used widely in carry trade strategies due to Japan’s historically low interest rates.

Key factors affecting USD/JPY:

• Monetary policy decisions by the Bank of Japan (BOJ).

• U.S. Treasury yields.

• Global risk sentiment (traders buy Yen in times of crisis).

3. GBP/USD (British Pound / U.S. Dollar) – “The Cable”

Nicknamed “The Cable” after the transatlantic cable used to transmit prices between London and New York in the 19th century, the GBP/USD is another major pair known for its volatility and trading opportunities.

Why it’s famous:

• High liquidity, though more volatile than EUR/USD.

• Strong correlation with U.K. political and economic developments.

• Popular among both day traders and long-term investors.

Key factors affecting GBP/USD:

• Bank of England (BoE) interest rate decisions.

• U.K. GDP, employment, and inflation data.

• Political events (e.g., Brexit negotiations).

4. USD/CHF (U.S. Dollar / Swiss Franc) – “The Swissie”

The Swiss Franc (CHF) is another safe-haven currency, valued for Switzerland’s political stability, strong banking sector, and conservative fiscal policies. The USD/CHF pair is often used as a hedge against global uncertainty.

Why it’s famous:

• Considered a safe-haven during global crises.

• Often moves inversely to EUR/USD because of the close economic relationship between Switzerland and the Eurozone.

• Tight spreads and good liquidity.

Key factors affecting USD/CHF:

• Swiss National Bank (SNB) interventions.

• Risk sentiment in global markets.

• Correlation with gold prices and European economic conditions.

5. AUD/USD (Australian Dollar / U.S. Dollar) – “The Aussie”

The AUD/USD pair reflects the relationship between the U.S. and Australian economies. Australia is a major exporter of commodities such as iron ore, gold, and coal, making this pair sensitive to global commodity prices.

Why it’s famous:

• Popular among traders due to its correlation with commodities.

• Often used to gauge risk appetite in the market.

• Heavily influenced by Chinese economic data, given China’s role as Australia’s largest trading partner.

Key factors affecting AUD/USD:

• Commodity prices (especially gold and iron ore).

• Decisions by the Reserve Bank of Australia (RBA).

• Chinese economic growth and trade demand.

6. USD/CAD (U.S. Dollar / Canadian Dollar) – “The Loonie”

Named after the loon bird on the Canadian one-dollar coin, the USD/CAD pair is highly influenced by oil prices, since Canada is one of the world’s top oil exporters.

Why it’s famous:

• High liquidity, often traded by those following energy markets.

• Strong correlation with crude oil prices.

• Stable price movements compared to some other pairs.

Key factors affecting USD/CAD:

• Oil market dynamics and OPEC decisions.

• Bank of Canada (BoC) interest rate policies.

• U.S.–Canada trade relations.

7. NZD/USD (New Zealand Dollar / U.S. Dollar) – “The Kiwi”

The NZD/USD is another commodity-driven pair, often moving in tandem with the Australian Dollar. New Zealand’s economy relies heavily on agricultural exports, especially dairy products.

Why it’s famous:

• Often correlated with global risk sentiment.

• Offers good volatility for short-term traders.

• Influenced by commodity prices and agricultural demand.

Key factors affecting NZD/USD:

• Global dairy and agricultural prices.

• Reserve Bank of New Zealand (RBNZ) interest rate policy.

• Regional economic performance (especially in Asia-Pacific).

Why Major Pairs Dominate Forex Trading

There are over 180 recognized currencies worldwide, yet most Forex traders focus on just a handful of pairs. Here’s why the major pairs dominate:

1. High Liquidity:
   Major pairs account for over 80% of daily Forex volume, ensuring tight spreads and minimal slippage.

2. Lower Transaction Costs:
   Due to intense competition among brokers and liquidity providers, spreads for major pairs are narrower, reducing trading costs.

3. Reliable Market Data:
   With heavy participation from institutional players, the pricing and data for major pairs are more accurate and transparent.

4. Economic Stability:
   Major pairs involve the world’s strongest economies, reducing the risk of extreme price manipulation or illiquidity.

The Most Traded Currency Pairs (by Volume)

According to data from the Bank for International Settlements (BIS) and major financial institutions, the most traded currency pairs globally are:

These figures illustrate how the U.S. Dollar dominates global currency trading, appearing in nearly 90% of all Forex transactions.

Cross and Exotic Pairs Worth Mentioning

While the majors take center stage, several cross-currency and exotic pairs are also popular among experienced traders seeking diversification or higher volatility.

Popular Cross Pairs:

• EUR/GBP – Reflects the relationship between two major European economies.

• EUR/JPY – Combines the Euro’s stability with the Yen’s safe-haven appeal.

• GBP/JPY – Known for sharp movements and high volatility.

Popular Exotic Pairs:

• USD/TRY (U.S. Dollar / Turkish Lira)

• USD/ZAR (U.S. Dollar / South African Rand)

• USD/SGD (U.S. Dollar / Singapore Dollar)

• EUR/PLN (Euro / Polish Zloty)

While these can offer larger potential gains, they also carry higher risks due to wider spreads, low liquidity, and greater sensitivity to political and economic instability.

How to Choose the Right Currency Pair to Trade

Selecting which currency pair to trade depends on your strategy, experience, and risk tolerance. Here are some tips:

1. Start with Major Pairs:
   They are more predictable and less prone to erratic price movements.

2. Consider Time Zones:
   Different pairs are more active during specific trading sessions (e.g., USD/JPY during the Asian session, EUR/USD during the European session).

3. Understand Correlations:
   Some pairs move in similar directions (e.g., AUD/USD and NZD/USD), while others move inversely (EUR/USD and USD/CHF).

4. Monitor Economic Calendars:
   Stay updated on interest rate announcements, employment data, and geopolitical news that impact the currencies you trade.

Conclusion

The Forex market is vast and dynamic, but the major currency pairs remain at its core. They offer the best combination of liquidity, stability, and trading opportunities, making them the preferred choice for both beginners and professionals.

Here’s a quick recap of the seven major pairs:

For new traders, focusing on these major pairs offers a solid foundation. As you gain experience, exploring cross and exotic pairs can diversify your strategy. Ultimately, understanding the dynamics behind these famous currency pairs is key to navigating the exciting world of Forex trading.