Major Currency Pairs in Forex to Know for International Economics

Major currency pairs in Forex play a crucial role in international economics, reflecting the economic relationships between countries. These pairs, like EUR/USD and USD/JPY, are influenced by various factors, including trade, interest rates, and geopolitical events, impacting global markets.

1. EUR/USD (Euro/US Dollar)

   • The most traded currency pair in the world, representing the two largest economies: the Eurozone and the United States.
   • Influenced by economic indicators such as GDP growth, employment rates, and inflation in both regions.
   • The pair is often seen as a barometer for global economic health and risk sentiment among investors.

2. USD/JPY (US Dollar/Japanese Yen)

   • A key pair that reflects the relationship between the US economy and Japan's export-driven economy.
   • Sensitive to changes in interest rates set by the Federal Reserve and the Bank of Japan, impacting capital flows.
   • Often used as a safe-haven currency pair during times of geopolitical uncertainty or market volatility.

3. GBP/USD (British Pound/US Dollar)

   • Known as "Cable," this pair is significant for its historical ties and the economic relationship between the UK and the US.
   • Influenced by political events, particularly Brexit developments, and economic data from both countries.
   • The pair is characterized by higher volatility compared to other major pairs, offering trading opportunities.

4. USD/CHF (US Dollar/Swiss Franc)

   • The Swiss Franc is considered a safe-haven currency, making this pair a popular choice during market downturns.
   • Influenced by Swiss economic stability, interest rates, and the Swiss National Bank's monetary policy.
   • Often used as a hedge against geopolitical risks and economic uncertainty.

5. AUD/USD (Australian Dollar/US Dollar)

   • Reflects the economic relationship between Australia, a major commodity exporter, and the US.
   • Influenced by commodity prices, particularly gold and iron ore, as well as economic data from China, a key trading partner.
   • The pair is sensitive to changes in global risk appetite and investor sentiment.

6. USD/CAD (US Dollar/Canadian Dollar)

   • Represents the economic ties between the US and Canada, heavily influenced by trade and energy prices.
   • The Canadian Dollar is often affected by fluctuations in oil prices, given Canada's status as a major oil exporter.
   • Economic indicators such as employment data and GDP growth in both countries play a crucial role in this pair's movements.

7. NZD/USD (New Zealand Dollar/US Dollar)

   • Reflects the economic relationship between New Zealand and the US, with a focus on agricultural exports.
   • Influenced by commodity prices, particularly dairy, and economic data from China, which is a significant trading partner.
   • The pair is often seen as a barometer for global risk sentiment, similar to the AUD/USD.