Analysis of the Seven (7) Forex Majors

What are the Forex Majors?

The Forex Majors are the most liquid currency pairs that contain the US Dollar either on the base side or on the quote side. The majors include seven (7) pairs. 

1.  EUR/USD (Euro / United States Dollar)

2.  USD/JPY (ForexExperts.net ResearchUnited States Dollar /Japanese Yen)

3.  GBP/USD (British Pound / United States Dollar)

4.  USD/CAD (The United States Dollar / Canadian Dollar)

5.  USD/CHF ( The United States Dollar / Swiss Franc)

6.  AUD/USD ( Australian Dollar / United States Dollar)

7.  NZD/USD (New Zealand Dollar / United States Dollar)

 » Learn about the Forex Minors

 

(1) EUR/USD

Description: Euro (EUR) to the United States dollar (USD) or else the ‘Fiber'

  • Market Share (BIS): 31.3% vs 87.6%
  • Central Banks Involved: » ECB against the » FED
  • Total Reserves (including gold): 565 billion USD vs 384 billion USD

EURUSD INFORMATION

EUR/USD or else the ‘Fiber’ is the most traded currency pair in the Forex market, accounting 23% of the total market activity (EURUSD share was 30% in 2001). About 88% of all Forex transactions are denominated in US dollars.

(↑) Historical High: 1.6039 (2008) – 1.8700 (1973)

(↓) Historical Low: 0.6688 (1985)

EURUSD KEY FACTS

  • The US dollar is the most traded currency worldwide (87.6%) while the Euro is the second (31.3%)
  • The US Dollar (62%) and the Euro (28%) are the most important reserve currencies in the world
  • EURUSD enjoys almost perfect information as the media covers every aspect of economic development regarding the US and Eurozone
  • USA, UK, and China are the euro area’s main trading partners
  • The American exports to Eurozone account 246.2 billion USD
  • The Eurozone’s exports to USA account 369.5 billion USD

TIPS WHEN TRADING EURUSD

  • EURUSD offers the best conditions for trading Forex (enormous liquidity and very tight spreads)
  • The best time to trade EURUSD occurs during the European and New York session overlap (13.00 GMT to 16.00 GMT)
  • The best month to go long to EURUSD is December and the best to go short is January
  • EURUSD is highly correlated to GBPUSD (+0.8 to +0.9)
  • EURUSD average daily volatility over the past 50 weeks was 0.87% or 93.82 pips 

 

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(2) GBP/USD

Description: British pound sterling (GBP) to the United States dollar (USD) or else the ‘Cable

  • Market Share (BIS): 12.8% vs 87.6%
  • Central Banks Involved: » BoE against the » FED
  • Total reserves (including gold): 130 billion USD vs 384 billion USD

GBPUSD INFORMATION

The British Pound (GBP) to the United States dollar (USD) or else the ‘Cable’ is one of the three most heavily traded pairs in the currency market. GBPUSD accounts about 9.2% of the overall Forex market volume (13.4% in 2004). The American economy is the largest in the world while the British economy is the 5th largest (2,650 billion USD).

(↑) Historical High: 2.6163 (1972)

(↓) Historical Low: 1.0438 (1985)

EURUSD KEY FACTS

  • About 62% of all Forex reserves are denominated in US dollars while the British Pound is the 3rd most held reserve currency in the world (4.0% of reserves)
  • London is the largest financial center in the world (37% of all daily foreign exchange transactions)
  • United States is UKs largest trade partner with 66.5 billion USD.
  • 5% of total UK exports are going to the United States and UK shows a trade surplus of 22.5 billion USD

TIPS WHEN TRADING GBPUSD

  • GBPUSD is traded in very tight spreads
  • EURUSD and GBPUSD are correlated +0.8 to +0.9
  • The best time to trade GBPUSD occurs during the European and New York session overlap (13.00 GMT to 16.00 GMT)
  • GBPUSD average daily volatility over the past 50 weeks was 1.24% or 155.98 pips

 

(3) USD/JPY

Description: United States dollar (USD) to Japanese yen (JPY) or else the ‘Yen

  • Market Share (BIS): 87.6% vs 21.6%
  • Central Banks Involved: » FED against the » BoJ
  • Total reserves (including gold): 384 billion USD vs 1,233 billion USD

USDJPY INFORMATION

USD/JPY or else the ‘Yen’ accounts about 17.7% of the overall Forex Market volume. The United States and Japan are two economic super-powers in terms of GDP and exports.

(↑) Historical High: 360.00 (1971)

(↓) Historical Low: 75.55 (2011)

USDJPY KEY FACTS

  • The American economy is the largest in the world (18.0 trillion USD GDP) and the Japanese economy is the 3rd largest in the world (4.1 trillion USD GDP)
  • Japan is holding the second largest amount of foreign reserves worldwide (1.23 trillion USD)
  • Japan is the second largest creditor to the US (first is China)
  • USD (62%) and JPY (4%) are two important reserve currencies

TIPS WHEN TRADING USDJPY

  • USDJPY is offered in very tight spreads, equally to GBPUSD
  • USDJPY moves in strong monthly trends and it is the perfect currency for swing traders
  • The vast amount of Japanese foreign reserves makes Bank of Japan the key determinant of the Yen’s exchange rate. Never trade against the goals of BoJ
  • USDJPY is notorious for its correlation to US Equity Markets (» Learn more on ForexExperts)
  • USD/JPY becomes more active between 12.00 GMT to 16.00 GMT
  • USDJPY average daily volatility over the past 50 weeks was 1.09% or 125.14 pips

 

(4) USD/CHF

Description: United States dollar (USD) to Swiss franc (CHF) or else the ‘Swissy

  • Market Share (BIS): 87.6% vs 4.8%
  • Central Banks Involved: » FED against the » SNB
  • Total reserves (including gold): 384 billion USD vs 602 billion USD

USDCHF INFORMATION

The United States dollar (USD) to Swiss franc (CHF) or else the ‘Swissy’ is an important Forex pair consisting two major reserve currencies. The long-term trend of USD/CHF is highly determined by the interest rate policies of Fed and the Swiss National Bank.

(↑) Historical High: 4.385 (1971)

(↓) Historical Low: 0.7085 (2011)

USDCHF KEY FACTS

  • The Swiss economy is considered the most trusted worldwide
  • 275 banks are operating in Switzerland, employing over 100,000 people and generating a turnover of 3.5 trillion USD
  • CHF is considered a ‘safe heaven’ at times of financial turmoil
  • The Swiss Franc is the official currency of Switzerland, Lichtenstein, and Campione d'Italia

TIPS WHEN TRADING USDCHF

  • USDCHF is highly correlated to EURCHF
  • USDCHF is also correlated to the US Bond Yields (» Learn more on ForexExperts)
  • USDCHFaverage daily volatility over the past 50 weeks was 0.86% or 85.56 pips

 

(5) USD/CAD

Description: United States dollar (USD) to Canadian dollar (CAD) or else the 'Loonie'

  • Market Share (BIS): 87.6% vs 5.1%
  • Central Banks Involved: » FED against the » BoC
  • Total reserves (including gold): 384 billion USD vs 80 billion USD

USDCAD INFORMATION

USDCAD or else the 'Loonie' is a popular Forex pair in America. The Canadian Dollar is a pure commodity currency due to the close ties between the Canadian economy and the oil industry.

(↑) Historical High: 1.6196 (2002)

(↓) Historical Low: 0.9056 (2007)

USDCAD KEY FACTS

  • Canada is the 7th largest producer of crude oil in the world
  • 70% of all Canada’s exports are heading to the US market
  • The Canadian Dollar accounts over 5% of the overall Forex market volume

TIPS WHEN TRADING USDCAD

  • USDCAD is correlated to the price of Crude Oil - CADUSD and Oil Price 0.75-0.80 positive correlation (» Learn more on ForexExperts)
  • The most active hours to trade the USD/CAD occur between 12.00 and 16.00 GMT
  • USDCAD average daily volatility (50 weeks) is 0.91% or 119.16 pips

 

(6) AUD/USD

Description: Australian dollar (AUD) to the United States dollar (USD) or else the ‘Aussie

  • Market Share (BIS): 6.9% vs 87.6%
  • Central Banks Involved: » RBA against the » FED
  • Total reserves (including gold): 49 billion USD vs 384 billion USD

AUDUSD INFORMATION

The Australian Dollar (AUD) to the United States dollar (USD) or else the ‘Aussie’ is a commodity currency tied to the raw materials sector. Australian exports include commodities such as metals, forestry, and fishery.

(↑) Historical High: 1.4875 (1974)

(↓) Historical Low: 0.4775 (2001)     

AUDUSD KEY FACTS

  • Based on recent GDP figures, Australia is the 13th largest economy in the world (1,257 billion USD).
  • Australia's exports are going mainly to China, Japan, South Korea, and India

TIPS WHEN TRADING AUDUSD

  • AUDUSD is highly correlated to NZDUSD, additionally, it is also correlated to EURUSD and GBPUSD
  • AUD is a commodity currency highly correlated to the price of Gold -80% historical correlation to the Gold Price (» Learn more on ForexExperts)
  • The best month to go long on AUDUSD is April and the best two months to go short are May and August
  • AUD/USD shows increased volatility between 12.00 and 15.00 GMT, 00.00 and 02.00 GMT, and 06.00 to 08.00 GMT
  • AUDUSD average daily volatility (50 weeks) is 1.15% or 86.78 pips

 

(7) NZD/USD

Description: New Zealand dollar (NZD) to the United States dollar (USD) or else the ‘Kiwi

  • Market Share (BIS): 2.1% vs 87.6%
  • Central Banks Involved: » RBNZ against the » FED
  • Total reserves (including gold): 15 billion USD vs 384 billion USD

NZDUSD INFORMATION

The NZD/USD or else the ‘Kiwi’ offers good liquidity and tight trading spreads. The New Zealand Dollar is a pure commodity currency. New Zealand exports include wood, wool, dairy products, meat products, and fisheries.

(↑) Historical High: 1.4900 (1973)

(↓) Historical Low: 0.3900 (2000)

NZDUSD KEY FACTS

  • New Zealand’s export partners include Australia (21.0%), China (15.0%), USA (9.2%), and Japan (7.0%)

TIPS WHEN TRADING NZDUSD

  • NZDUSD is highly correlated to AUDUSD and also correlated to EURUSD and GBPUSD
  • The best two months to go long on NZDUSD are April and December, the best months to go short are May and August
  • NZD/USD shows increased volatility between 12.00 and 15.00 GMT, 00.00 and 02.00 GMT, and 06.00 to 08.00 GMT
  • NZDUSD average daily volatility (50 weeks) is 1.21% or 88.29 pip

 

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FOREX BROKER

TRADING TERMS

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FXCC

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US TRADERS: NO

ISLAMIC ACCOUNTS: YES

EXECUTION: ECN / STP

SPREADS

EURUSD: 1.2

GBPUSD: 1.6

USDJPY: 1.3

COMMISSIONS: Included

SCALPING: YES

AUTOMATED TRADING: YES

SLIPPAGE: 1.6 pip

LEVERAGE: 1:300

PLATFORMS:

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MIN. DEPOSIT: $100

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REBATES: 0.5-0.6 pip via Forex-Rebates.com

KEY POINTS

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US TRADERS: NO

ISLAMIC ACCOUNTS: YES

EXECUTION: STP / ECN

SPREADS

EURUSD: 0.2 pip

GBPUSD: 1.1 pip

USDJPY: 0.6 pip

COMMISSIONS: $10 / lot

SCALPING: YES

AUTOMATED TRADING: YES

SLIPPAGE: 0.55 pip

LEVERAGE: 1:1,000

FREE VPS: For deposits over $5,000

PLATFORMS:

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MIN. DEPOSIT: $10

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BONUS: 30% Rescue Bonus

REBATES: $6.4 / lot via Forex-Rebates.com

KEY POINTS

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  • Free VPS for all traders holding more than $5,000
  • Many Trading Contests
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US TRADERS: NO

ISLAMIC ACCOUNTS: YES

EXECUTION: ECN / STP

 

 

SPREADS

EURUSD: 0.1

GBPUSD: 0.3

USDJPY: 0.5

COMMISSIONS: $7.0 / lot

SCALPING: YES

AUTOMATED TRADING: YES

SLIPPAGE: 2.0 pip

LEVERAGE: 1:500

FREE VPS: YES (100 round turn lots per calendar month are required)

PLATFORMS:

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MIN. DEPOSIT:

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FUND METHODS:

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BONUS: NO BONUS

REBATES: $1.2 / lot via Forex-Rebates.com

KEY POINTS

  • Tight Spreads
  • cTrader and cAlgo plus MT4
  • Low latency

 

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TALLINEX

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US TRADERS: YES

ISLAMIC ACCOUNTS: YES

EXECUTION: ECN

SPREADS

EURUSD: 0.75 pip

GBPUSD: 1.1 pip

USDJPY: 0.9 pip

COMMISSIONS: $6.0 / lot

SCALPING: YES

AUTOMATED TRADING: YES

SLIPPAGE: 2 pip

LEVERAGE: 1:500

FREE VPS: YES (5 Lots minimum monthly volume is required)

PLATFORMS:

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MIN. DEPOSIT:

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FUND METHODS:

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BONUS: 100% Credit Bonus

REBATES: Contact Forex-Rebates.com

KEY POINTS

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  • Welcome Bonus

 

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An Analysis of the Seven (7) Forex Majors

by George Protonotarios, Financial Analyst

ForexExperts.net (c) All rights reserved

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