Forex Advice: Which Currency Pairs Should You Be Trading Right Now?

Forex daily trading volumes reached a record high in London earlier this year and increased substantially in the US.

This is one of the best times in a long time to hop into Forex trading. But even so, most Forex traders can only focus on a few currency pairings at a time.

Of course, settling on the right currency pairs isn’t easy. The best major forex pairs have high liquidity, narrow spreads, and strong news flow. That said, minor pairs and risky exotic pairs may come into play for experienced traders too.

Curious about what currency pairings stand out from the rest? Read on to learn about the best Forex pairs to trade this year!

Major Forex Pairs

If you want to trade Forex succesfully, major currency pairings are the best place to start, as they’re the most popular. Thanks to the high liquidity, you won’t have to worry about dealing with too much volatility. And staying up-to-date on the latest news and data is a piece of cake.

Let’s take a quick look at three major Forex pairs you should consider trading right now.

1. U.S. Dollar/Japanese Yen

Behind the US Dollar and Euro, the Japanese yen is the 3rd most traded currency in the world. That makes this pair very liquid, and the spreads are competitive as well.

2. Euro/U.S. Dollar

Consisting of the two biggest currencies in the world, this pairing offers the lowest spread in Forex. It’s liquid yet volatile, which makes a great choice for traders of all experience levels.

3. British Pound/U.S. Dollar

Often referred to as “The Cable,” this pair not only offers tight spreads but also fantastic liquidity. It makes up a large chunk of the daily transactions on the Forex.

Cross-Currency Pairs

The US Dollar has served as the world’s reserve currency for almost 100 years at this point. But there are so many great Forex trading opportunities that involve cross-currency combinations.

Check out a few of the top minor currency pairings.

1. British Pound/Euro

This pairing consists of two of the top 4 most traded currencies in the world, making it one of the most liquid. It’s typically very stable compared to many other pairs.

2. Euro/Japanese Yen

With these two currencies, you’ll find attractive spreads and high trading volume. A well-informed trader can make a good profit thanks to the volatility of this pair.

3. Euro/Australian Dollar

Since Australia is the second largest producer of gold, shifts in gold prices have a significant impact on this pair. While this pairing makes up a very small percent of Forex transactions, it’s a great hedge.

Exotic Currency Pairs

In most cases, the cons of exotic currency pairings heavily outweigh the pros. When trading exotic currencies, you can expect high transaction costs and a lot of price fluctuations due to volatility. Keep in mind that high-quality historical data and news will be hard to come by as well.

However, they also give experienced traders with a high risk tolerance a chance to challenge themselves and diversify. Here are some of the best exotic pairs to look out for.

1. U.S. Dollar/Hong Kong Dollar

The Hong Kong Dollar ranks in the top 10 most-traded currencies. This pair can bring steady profits for those who are patient enough to stick with it.

2. U.S. Dollar/Mexican Peso

When it comes to the most traded currency pairs, this ranks in the top 10, and the Mexican Peso is the 8th most liquid currency in the world.

3. U.S. Dollar/Swedish Krona

A pair as volatile as this offers the potential for outstanding profits, but keep an eye on EUR/USD.

Final Thoughts on the Best Currency Pairs

Are you still having trouble deciding which currency pairs are right for you?

If you want to get into Forex day trading, consider what time of the day you prefer. For example, 6:00 GMT to 15:00 GMT is the most volatile timeframe for GBP/USD.

However, if you’re a first-time trader, start with a demo account. When you’re ready to take the next step, steer clear of exotic pairs and stick to those with the highest trading volume and the tightest spreads. This provides you with an ideal environment to build up confidence and sharpen your skills.

Looking to stock up on more can’t-miss Forex trading tips? If so, be sure to read our guide for picking the best Forex broker!

This article was written by our in-house forex traders with a combined 20+ years of experience in trading the financial markets.