Currency Pairs Explained
A complete breakdown of major, minor, and exotic currency pairs — including typical spreads, volatility profiles, and pip values.
How to read a currency pair
A currency pair shows the exchange rate between two currencies. The first currency (base) is what you buy or sell; the second (quote) is what you pay with. For example, EUR/USD = 1.0850 means 1 Euro costs 1.0850 US Dollars. When you go long, you buy the base currency. When you go short, you sell it. The spread is the difference between the buy (ask) and sell (bid) price — it is the broker's effective fee for executing the trade.
Major Pairs
The 7 most traded currency pairs globally, all involving the US Dollar.
The most traded currency pair in the world, representing the Euro against the US Dollar. It benefits from exceptional liquidity and tight spreads across all major trading sessions.
The British Pound against the US Dollar, commonly called "Cable". Known for sharp directional moves and high activity during London and New York session overlaps.
The US Dollar against the Japanese Yen. Popular for carry trades and closely tied to Bank of Japan monetary policy. Often moves inversely with risk sentiment.
The US Dollar against the Swiss Franc. The Swiss Franc is considered a safe-haven currency, causing USD/CHF to move inversely to risk appetite and often to EUR/USD.
The Australian Dollar against the US Dollar. Strongly correlated with commodity prices, particularly gold and iron ore, and sensitive to Chinese economic data.
The US Dollar against the Canadian Dollar, known as the "Loonie". Closely correlated with crude oil prices given Canada's oil-heavy export economy.
The New Zealand Dollar against the US Dollar, called the "Kiwi". Sensitive to commodity prices, dairy exports, and Reserve Bank of New Zealand rate decisions.
Minor Pairs
Currency pairs that do not include the US Dollar but involve major currencies.
Euro against British Pound. Lower volatility than GBP/USD or EUR/USD individually, but highly sensitive to UK economic data and political events.
Euro against Japanese Yen. A popular cross for carry trades. Moves are amplified relative to individual USD pairs due to the cross-rate calculation.
British Pound against Japanese Yen, known for significant intraday volatility. Popular with experienced short-term traders for its range and speed of movement.
Australian Dollar against Japanese Yen. A classic risk-sentiment barometer — tends to rise when global risk appetite is strong and fall during market stress.
Exotic Pairs
Pairs involving one major currency and one from an emerging market economy.
Warning: Exotic pairs carry significantly wider spreads, lower liquidity, and higher volatility than major pairs. They are generally suited to experienced traders only. Always use stop-losses and position-size carefully.
US Dollar against South African Rand. High volatility driven by commodity prices, political risk, and South Africa's current account dynamics.
US Dollar against Nigerian Naira. Extremely wide spreads and limited liquidity. Subject to sharp moves from central bank interventions and oil price shifts.
Euro against Turkish Lira. Very high volatility due to Turkey's inflation environment and geopolitical factors. Requires careful risk management.
US Dollar against Mexican Peso. Sensitive to US trade policy, oil prices, and remittance flows. More liquid than most exotics but still carries elevated risk.
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