The 4 Most Traded FOREX Currencies

Trading FOREX currencies involves buying and selling monies of different countries. Although the number of currencies that can be traded is nearly the same as the number of countries in the world, a handful of currencies are traded far more than the rest. These popular currencies have higher liquidity and enjoy higher trading volumes in FOREX markets, so they attract more investors and traders.

United States Dollar

Officially referred to in the market as the USD, the US dollar is the most common base currency used in FOREX trading options. Four of the most common currency pairs use the US dollar: the USD/JPY, USD/CHF, EUR/USD and GBP/USD. The US dollar is the most widely used currency in international transactions. Several countries other than the United States use it as their official currency, while it is the de facto currency in some others. Despite the fact that the US dollar has significantly depreciated in value in recent years, it remains, alongside the euro, one of the most important reserve currencies used by countries.

Euro


In trading FOREX currencies, the euro is known in its standard abbreviated form EUR. It is the official monetary unit in the European Union and used in Germany, France, Italy, Ireland, Spain, Portugal, Belgium, Austria and other, smaller countries in the eurozone. The fact that over 300 million people in Europe and even Africa use it every day makes the Euro one of the most important currencies today. This currency was introduced only in 2002, and its popularity has played a role in the depreciation of the US dollar.

British Pound

The British pound, or the GBP, is the currency used in the United Kingdom. Ordinarily referred to as the pound, it is third on the list of the most widely used reserve currencies, next to the US dollar and the euro. When trading FOREX currencies, the GBP comes in fourth after the Japanese yen in terms of daily trading volume. In the market, the pound basically fluctuates against the euro and other major currencies. It can also move in the same direction as the euro, depending on their relationship with other currencies, particularly the US dollar. The GBP can be bought and sold freely in open FOREX markets, and it is one of the highest valued monetary units in the world.

Japanese Yen

Referred to in the markets as JPY, the yen is Japan’s official currency. Next to the US dollar and euro, it gets the third highest trading volume in FOREX markets. As a reserve currency, the yen is also widely used, overtaken only by the US dollar, the euro, and the British pound. The value of this currency is largely dictated by the law of supply and demand plus prevailing economic forces. For instance, the demand for yen rises when foreign investors want to buy goods made in Japan. This scenario is good for the Japanese yen because it can raise its price and exchange rate.

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