Key Insights into the Seven Forex Majors
🏛️ The 7 Major Forex Currency Pairs and Their Nicknames
The 7 majors are the most actively traded currency pairs in the Foreign Exchange market and possess the highest levels of liquidity.
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EUR/USD – Euro vs. US Dollar -Nickname: Fiber
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USD/JPY – US Dollar vs. Japanese Yen -Nickname: Gopher or simply "Yen"
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GBP/USD – British Pound Sterling vs. US Dollar -Nickname: Cable
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USD/CHF – US Dollar vs. Swiss Franc -Nickname: Swissy
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AUD/USD – Australian Dollar vs. US Dollar -Nickname: Aussie
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USD/CAD – US Dollar vs. Canadian Dollar -Nickname: Loonie
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NZD/USD – New Zealand Dollar vs. US Dollar -Nickname: Kiwi
🎯 Key Characteristics
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Exceptional Liquidity: These 7 pairs represent roughly 70-80% of the daily trading volume in the Forex market. This high trading activity results in:
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Narrow Spreads: The gap between the Bid (selling) and Ask (buying) prices is minimal, which lowers transaction costs.
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Quick Execution: Orders, including large ones, are usually filled swiftly at or very close to the intended price, minimizing slippage.
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Efficient Pricing: High liquidity promotes stable and accurate price discovery, allowing market information to be reflected promptly.
🔄 Why the USD Holds a Central Role:
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The US dollar serves as the primary reserve currency for central banks around the world.
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A large portion of global trade is carried out in USD, especially for essential commodities like oil and gold, which are typically priced in dollars.
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The strength and size of the US economy underpin the central role of its currency in international finance.
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The US boasts the most extensive and liquid financial markets, ensuring a steady and substantial flow of USD in global transactions.
» Learn also about the Forex Minors
These are the 7 Forex majors:
(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, also known as the ‘Fiber’, is the most traded currency pair in the Forex market, accounting for 23% of total market activity (down from 30% in 2001). Approximately 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
(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), also known as the ‘Cable’, is one of the three most heavily traded pairs in the currency market. GBP/USD accounts for approximately 9.2% of the overall Forex market volume (down from 13.4% in 2004). The U.S. economy is the largest in the world, while the British economy ranks fifth, with a GDP of around 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, also known as the ‘Yen’, accounts for approximately 17.7% of the overall Forex market volume. The United States and Japan are two economic superpowers 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), also known as the ‘Swissy’, is a key Forex pair comprising two major reserve currencies. The long-term trend of USD/CHF is largely influenced by the interest rate policies of the Federal Reserve 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
USD/CAD, also known as the ‘Loonie’, is a popular Forex pair in the Americas. The Canadian Dollar is considered a pure commodity currency due to the strong link 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), also known as the ‘Aussie’, is a commodity currency closely tied to the raw materials sector. Australia’s exports include commodities such as metals, forestry products, and fishery goods.
■ (↑) 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
NZD/USD, also known as the ‘Kiwi’, offers good liquidity and tight trading spreads. The New Zealand Dollar is a pure commodity currency, supported by exports such as wood, wool, dairy products, meat, 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
⚖️ TRADING THE 7 MAJORS -COMPARE FX BROKERS
ECN Brokers offering the best trading terms for trading the Forex Majors (Regulation, Tight Spreads, Free VPS, Low Slippage, etc.)
Table: Compare Forex Brokers
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FOREX BROKER |
TRADING TERMS |
ACCOUNTS |
INFO |
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LICENSE:
CLIENT ACCOUNT SEGREGATION: YES US TRADERS: NO SWAP-FREE ACCOUNTS: YES FOUNDATION: 2009 DOMICILED: Belize |
SPREADS EURUSD: 0.10 GBPUSD: 0.15 USDJPY: 0.15 COMMISSIONS: $4.0 / full traded lot SCALPING: YES AUTOMATED TRADING: YES FREE VPS: YES |
EXECUTION: ECN/STP/CFD PLATFORMS:
MIN. DEPOSIT: $10 for the MT4/MT5 account. FUNDING METHODS:
FUNDS SAFETY: All RoboForex clients are protected by up to EUR 20,000 |
KEY POINTS
|
|
IC MARKETS
LICENSE:
CLIENT ACCOUNT SEGREGATION: YES US TRADERS: NO SWAP-FREE ACCOUNTS: YES US TRADERS: NO ISLAMIC ACCOUNTS: YES |
SPREADS EURUSD: 0.1 GBPUSD: 0.3 USDJPY: 0.5 COMMISSIONS: $7.0 / lot SCALPING: YES AUTOMATED TRADING: YES SLIPPAGE: 2.0 pip LEVERAGE: 1:30 FREE VPS: YES (100 round turn lots per calendar month are required) |
EXECUTION: ECN/STP/CFD PLATFORMS:
MIN. DEPOSIT: $200 for the MT4 account and $1,000 for the cTrader account FUND METHODS:
BONUS: NO BONUS |
KEY POINTS
► Register a Demo Account with IC MARKETS ► Register a Real ECN Account with IC MARKETS
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■ An Analysis of the Seven (7) Forex Majors
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