Each currency pair has its own personality—unique characteristics that affect how it trades. Understanding these differences can give you an edge. Let's examine the three most important pairs.
EUR/USD: The World's Most Traded Pair
EUR/USD accounts for approximately 25% of all forex trading volume.
Why It Matters
- Most liquid pair in the market
- Tightest spreads (lowest trading costs)
- Represents two of the world's largest economies
Characteristics
- Volatility: Moderate—moves steadily, not erratically
- Average daily range: 70-100 pips
- Best trading times: London and New York sessions
- Key support/resistance: Often respects round numbers
What Moves EUR/USD
- ECB interest rate decisions
- Federal Reserve policy
- Eurozone economic data (German numbers particularly important)
- US employment and inflation data
- Political events in Europe or US
Trading Tips
- Most beginner-friendly major pair
- Trends tend to be cleaner than other pairs
- Watch for consolidation during Asian session
USD/JPY: The Risk Barometer
USD/JPY is the second or third most traded pair and has unique characteristics.
Why It Matters
- Reflects US-Japan economic relationship
- Sensitive to global risk sentiment
- Japanese institutional flows significant
Characteristics
- Volatility: Can be quiet, then explosive
- Average daily range: 50-80 pips (but can spike much higher)
- Best trading times: Asian session (Tokyo) and US session
- Key feature: Yen is a "safe haven" currency
What Moves USD/JPY
- Bank of Japan interventions (verbal and actual)
- Risk-on/risk-off sentiment
- US Treasury yields
- Japanese economic data
- Global market volatility (VIX)
Trading Tips
- In risk-off environments, Yen strengthens (USD/JPY falls)
- Watch for BOJ comments—intervention threats move markets
- Gaps can occur after weekend events
GBP/USD: The Volatile Giant
"Cable" (named for the transatlantic cable that transmitted prices) is known for its larger moves.
Why It Matters
- Third most traded pair
- Higher volatility attracts traders seeking larger moves
- British economy closely watched
Characteristics
- Volatility: Higher than EUR/USD and USD/JPY
- Average daily range: 100-150 pips
- Best trading times: London session (GBP overlaps)
- Key feature: Can move fast and far
What Moves GBP/USD
- Bank of England decisions
- UK economic data (inflation, employment, GDP)
- Brexit-related developments (still matters)
- UK political events
- General USD strength or weakness
Trading Tips
- Wider stops needed due to volatility
- Can trend strongly but also reverse violently
- London open often sets the tone
Comparing the Three Pairs
| Aspect | EUR/USD | USD/JPY | GBP/USD |
|---|---|---|---|
| Volatility | Moderate | Variable | High |
| Spread | Tightest | Very tight | Moderate |
| Best for | Beginners | All levels | Experienced |
| Primary session | London/NY | Asian/NY | London |
| Daily range | 70-100 pips | 50-80 pips | 100-150 pips |
Correlations to Watch
EUR/USD and GBP/USD
Generally positively correlated—they often move in the same direction. If both European currencies are strengthening against the dollar, the move has more conviction.
EUR/USD and USD/JPY
Often negatively correlated. USD strength means EUR/USD falls and USD/JPY rises.
All Three
When all three move in the same direction against the dollar, it signals broad dollar weakness or strength.
Which Pair Should You Trade?
Start with EUR/USD if:
- You're new to forex
- You prefer cleaner, slower moves
- You want the lowest trading costs
Consider USD/JPY if:
- You trade during Asian hours
- You want to capitalize on risk sentiment
- You're comfortable with sudden moves
Consider GBP/USD if:
- You like volatility and bigger moves
- You're experienced with forex
- You can handle wider stops
Practice Major Pairs
At ChartMini, you can practice trading all major currency pairs with historical data. Experience the different personalities of each pair and find which suits your trading style.
Conclusion
Each major pair offers different opportunities and challenges. Understanding their unique characteristics—volatility, session behavior, and driving factors—helps you trade more effectively.
Don't just pick randomly. Match the pair to your style and experience level.