The forex market is made up of many currency pairs, but there are a few pairs that are considered to be the most commonly traded and liquid. These are known as the major currency pairs or simply the"majors."
The major currency pairs consist of seven currencies, which are:
US dollar (USD)
Euro (EUR)
Japanese yen (JPY)
British pound sterling (GBP)
Swiss franc (CHF)
Canadian dollar (CAD)
Australian dollar (AUD)
The major currency pairs are:
EUR/USD (euro/US dollar)
USD/JPY (US dollar/Japanese yen)
GBP/USD (British pound/US dollar)
USD/CHF (US dollar/Swiss franc)
USD/CAD (US dollar/Canadian dollar)
AUD/USD (Australian dollar/US dollar)
NZD/USD (New Zealand dollar/US dollar)
These pairs are considered major because they are the most heavily traded pairs and have the highest liquidity in the forex market. They also tend to have lower spreads and are the most widely followed by traders and investors.
let me explain each of the major currency pairs:
EUR/USD (euro/US dollar) - This pair represents the eurozone's euro currency against the US dollar. It is the most heavily traded currency pair in the world, accounting for about 25% of daily forex volume. The euro is the second most traded currency after the US dollar, and this pair is often influenced by economic data releases from the eurozone and the US, as well as global events such as political developments and central bank announcements.
USD/JPY (US dollar/Japanese yen) - This pair represents the US dollar against the Japanese yen. Japan is the world's third-largest economy and the yen is often seen as a safe-haven currency, meaning that it tends to appreciate during times of market uncertainty. This pair is also heavily influenced by the policies of the Bank of Japan and the Federal Reserve, as well as economic data releases from both countries.
GBP/USD (British pound/US dollar) - This pair represents the British pound against the US dollar. It is also known as "cable" because it was historically traded through transatlantic cable. The pound is the fourth most traded currency in the world, and this pair is heavily influenced by economic data releases from the UK and the US, as well as geopolitical developments and central bank policy.
USD/CHF (US dollar/Swiss franc) - This pair represents the US dollar against the Swiss franc. Switzerland is a small, but influential country in the global economy, and the Swiss franc is often seen as a safe-haven currency due to its stability and neutrality. This pair is heavily influenced by central bank policy from both countries, as well as economic data releases from the US and Switzerland.
USD/CAD (US dollar/Canadian dollar) - This pair represents the US dollar against the Canadian dollar. Canada is a major exporter of commodities, particularly oil, and this pair is heavily influenced by fluctuations in commodity prices. It is also influenced by economic data releases from both countries and central bank policy from the Bank of Canada and the Federal Reserve.
AUD/USD (Australian dollar/US dollar) - This pair represents the Australian dollar against the US dollar. Australia is a major exporter of commodities, particularly iron ore and coal, and this pair is heavily influenced by fluctuations in commodity prices. It is also influenced by economic data releases from Australia and the US, as well as central bank policy from the Reserve Bank of Australia and the Federal Reserve.
NZD/USD (New Zealand dollar/US dollar) - This pair represents the New Zealand dollar against the US dollar. New Zealand is a small, but influential economy in the global economy, and the New Zealand dollar is often influenced by commodity prices, similar to the Australian dollar. This pair is also influenced by economic data releases from New Zealand and the US, as well as central bank policy from the Reserve Bank of New Zealand and the Federal Reserve.