10 Best Forex Pairs To Trade in 2022

Research
Rebecca Cattlin
By :  ,  Financial Writer

The best forex pairs to trade are often the most liquid, offering traders low spreads and faster execution. Discover the 10 most traded currency pairs in the world and how you can start trading them.

What makes the best forex pair to trade?

The best forex pair to trade will ultimately depend on your trading strategy but, in general, the most popular forex pairs are those that are liquid, experience volatility, and have a decent amount of volume at the time of day you want to trade.

Let’s look at each aspect in more detail.

Liquidity

The forex market is known for its high liquidity, which means that transactions can be executed quickly and efficiently. But not all currencies have the same liquidity.

The major currency pairs comprise up to 75% of forex volume, which makes them easier to trade than minors and exotic pairs because they have the majority of buyers and sellers. Not surprisingly, all of these pairs contain the US dollar – due to the sheer size of the US economy.

The greater the liquidity, the tighter the spread, which means the underlying market price doesn’t need to move as much for your trade to be profitable.

In normal market conditions, there’s often between a 1-5 point spread between the bid and offer on major currency pairs and liquid cross rates. But when liquidity is low, this gap can widen and so more capital would be needed to cover your fees.

Learn more about forex trading.

Volatility

Different currency pairs will experience a different speed of change in their exchange rate – more commonly known as volatility. This will impact your decision on what to trade, as it can increase risk.

Traders who are interested in taking a longer-term position might choose less volatile pairs, while shorter-term speculators might be happy to scalp smaller profits off quick price movements many times each day.

Movement in the forex market is measured by pips, which are the last decimal place in the quote price of a currency. So, short-term traders will seek out currency pairs with the greatest pip values.

Time of day

Different pairs will be better to trade at different times of day. Why? Because the time of day heavily influences how liquid a market is, and how much price movement it’s likely to see.

Pair Tokyo London New York
EUR/USD 76 114 92
GBP/USD 92 127 99
USD/JPY 51 66 59
AUD/USD 77 83 81
NZD/USD 62 72 70
USD/CAD 57 96 96
USD/CHF 67 102 83
EUR/JPY 102 129 107
GBP/JPY 118 151 132
AUD/JPY 98 107 103
EUR/GBP 78 61 47
EUR/CHF 79 109 84

By looking at the average pip movement of major currency pairs during each forex trading session, we can see that the London session – which runs from 8:00 to 16:00 GMT – has the most movement.

As a general rule, a currency pair will see the most liquidity and price action when two sessions overlap. For example, if you’re trading EUR/JPY, you’d want to trade when both the New York and Sydney session are open – which is between 8:00 to 9:00(GMT).

Learn more about forex market hours and the best time to trade FX.

What are the best forex pairs to trade?

The best forex pairs to trade are usually those with the most trade volume – and therefore liquidity. According to the most recent Bank of International Settlements (BIS) Triennial Survey in 2019 , these pairs are:

  1. EUR/USD
  2. USD/JPY
  3. GBP/USD
  4. AUD/USD
  5. USD/CAD
  6. USD/CNY
  7. USD/CHF
  8. USD/HKD
  9. EUR/GBP
  10. USD/KRW

1. EUR/USD

EUR/USD – or the ‘fibre’ – is widely considered the most popular forex pair as it typically comes with the highest volume and among the lowest spreads. Unsurprisingly, its popularity also stems from the fact it’s the best way to take a position on two of the largest economies in the world – the United States and the Eurozone.

The EUR/USD pair is primarily influenced by political movements that affect the dollar, the euro and their relationship to one another. For example, if the Federal Reserve intervenes in market activities to strengthen the dollar currency, you can expect it to rise against the euro and for the EUR/USD pair to decline in value.

EUR/USD is a common trade for beginners because there’s usually a lot of information available online about the pair.

Discover what the strongest currency in the world is.

Currency pair Min spread Margin % of daily trade volume
EUR/USD 0.0000514 points 1% 24%

2. USD/JPY

USD/JPY is commonly associated with low spreads, and more predictable price movements compared to other pairs.

Although the value of the yen does see a lot of daily price volatility, the central bank of Japan frequently buys and sells the currency to keep exchange rates under control and cultivate a competitive export market.

That’s why the yen is commonly said to be under a ‘dirty float’ regime – as it is a floating currency, but not in the truest sense of the word.  So, trading USD/JPY is a means of capitalising on these more regular fluctuations – if you’re able to buy and sell at the right time.

USD/JPY (also known as the gopher) has also become a popular way of trading the relationship – or rather tensions – between the United States and Asian regions as competition heats up in areas such as technology and e-commerce.

Currency pair Min spread Margin % of daily trade volume
USD/JPY 0.00548 points 1% 13.2%

3. GBP/USD

GBP/USD – known as ‘cable’ – has always been a popular pair, but due to various economic and political events in the UK, the volume of traders wanting to speculate on the UK economy has increased dramatically, including the 2008 financial crisis and the UK’s decision to leave the EU.

More recently, in September 2022, traders flocked to GBP/USD as the UK government and Bank of England battled to keep inflation under control, causing the pound to plummet to its lowest level since 1985.

The currency pair is nearly always grouped into the volatile category, and these large jumps have contributed a lot towards the popularity of the GBP/USD. But remember, with greater volatility comes greater risk, making it important to set stops and limits to protect your trades.

Currency pair Min spread Margin % of daily trade volume
GBP/USD 0.00006 points 1% 9.6%

4. AUD/USD

AUD/USD, often called the ‘Aussie’, makes up 5.4% of daily forex trades. It’s popular among traders as the value of AUD is highly correlated with the commodities, so creates a means of FX traders getting exposure to the market without trading futures contracts themselves.

That’s because Australia remains one of the most dominant exporters of coal and iron ore in the world. A slump in commodity prices would impact the economy and decrease the value of the Australian dollar. In turn, this would cause the price of AUD/USD to fall – as fewer US dollars are needed to buy an Aussie dollar.

Learn about currency correlations.

If you’re interested in holding AUD, you should keep a close eye on the price of commodities that are crucial to the Australian economy, as well as announcements from the Reserve Bank of Australia or Federal Reserve.

Currency pair Min spread Margin % of daily trade volume
AUD/USD 0.000022 points 5.4% 9.6%

5. USD/CAD

The US dollar and the Canadian dollar have a strong correlation, due to being fiscal neighbours and important trading partners.

But the value of the Canadian dollar is also heavily correlated with commodity prices, especially the price of oil, as Canada’s economy relies heavily on exporting oil. So, this makes it important to monitor the price of oil to determine the ideal time to buy if you want to exchange USD for CAD.

It’s also worth bearing in mind that as oil is priced in US dollars, if the price of oil rises, it’s likely that the value of the Canadian dollar will strengthen compared to the US dollar. This is for two main reasons. First, the dollar normally weakens when oil rises, because more dollars are being converted into other currencies to buy oil. Second, Canada will earn US dollars by exporting its oil.

Currency pair Min spread Margin % of daily trade volume
USD/CAD 0.00009 points 1% 4.4%

6. USD/CNY

This pair is made up of the US dollar and the Chinese renminbi or yuan. It tells us the exchange rate between the two largest economies in the world, and the two largest exporters.

Historically, the value of the yuan has been low compared to the US dollar because the Chinese government has artificially driven down the price to keep its exports competitive on the global market.

More recently, the leading factors to monitor when trading the USD/CNY pair is US-China tensions, which have flared up for a number of reasons over the years. For example, in August 2022, US House Speaker Nancy Pelosi visited Taiwan, which caused Beijing to suspend US-China climate talks and cut off high-level military communication channels.

CNY is the forex ticker for the Chinese renminbi trading market, but when the yuan is traded offshore, it is referred to as CNH – so on our platform, this pair is listed as USD/CNH. CNH has usually not been as tightly controlled as CNY by the Chinese government, which means it can be more volatile.

Currency pair Min spread Margin % of daily trade volume
USD/CNH 0.000078 points 1% 4.1%

7. USD/CHF

USD/CHF is the currency pair made up of the US dollar against the Swiss franc (CHF) the official currency of Switzerland.

For the most part, the currency pair is used by traders and investors who want to protect their assets in periods of market turbulence and economic downturn. The CHF is largely considered to be a ‘safe-haven’ currency thanks to the stability of the Swiss financial system, which means that it appreciates when other currencies lose value.

But this means that in periods of economic stability, the CHF will often weaken in value when other currencies are appreciating.

Currency pair Min spread Margin % of daily trade volume
USD/CHF 0.000015 points 1% 3.6 %

8. USD/HKD

USD/HKD is the Hong Kong dollar against the US dollar. Although it’s still technically considered an exotic pair – as it’s the US dollar against a non-major economy – the pair’s trading volume doubled between 2016 and 2019. It now accounts for 3.3% of daily trade volume according to the BIS survey.

The value of the HK dollar is actually pegged to the US dollar in what’s known as a ‘linked exchange rate’. This means the HKD is only allowed to fluctuate against USD within a set band of between 7.75 and 7.85.

Although this system makes the USD/HKD less volatile than other pairs, it is still popular among swing traders.

Currency pair Min spread Margin % of daily trade volume
USD/HKD 0.0013 points 1% 3.3%

9. EUR/GBP

Although EUR/GBP is the exchange rate between two of the largest economies – the eurozone and the UK – it’s still only a minor pair because it doesn’t include the US dollar.

The pair is perhaps one of the most difficult exchange rates to predict, because of the close but uncertain link between the economies. The run up to Brexit caused a highly volatile price for EUR/GBP, and as the UK heads for a deeper recession than the eurozone, it’s likely the pound will suffer more losses against the EUR.

It’s important to monitor the ongoing political and economic ties between the UK and EU to trade EUR/GBP, as well as the interest rates set by the Bank of England and the European Central Bank.

Currency pair Min spread Margin % of daily trade volume
AUD/USD 0.0000844 points 1% 2.0%

10. USD/KRW

USD/KRW – the rate between the US dollar and South Korean won – makes up 1.9% of daily transactions as of 2019. It was the first year that the currency made it onto the list of the top ten currency pairs.

So far in 2022, the won has remained close to its lowest level since 2009 due to rising interest rates, global recession fears and weakening demand for exports.

South Korea’s economy is largely dependent on international trade and is actually in the top-10  largest exporter and importer countries, which means the widening trade deficit is likely to weigh heavily on the won. The deficit is expected to reach around $50 billion for 2022, due to soaring costs of energy and other commodities – this marks the country’s largest-ever trade gap since 1964.

How to trade the best currency pairs

You can trade over 80 currency pairs with low spreads and instant execution with City Index. All you need to do is:

  1. Open your City Index account, or log in to an existing account
  2. Search for the currency pair you want to trade
  3. Enter your position and add risk management tools
  4. Monitor and close your trade

Best currency pairs summed up

The best currency pair for you will ultimately depend on your strategy and interest. But most traders stick to the currency pairs that have the most volume and liquidity – and therefore come with the most volatility.

These often include the major currency pairs, that are crossed with the US dollar, such as EUR/USD, GBP/USD, USD/JPY, and USD/CHF.

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