What are the 28 Currency Pairs

In the foreign exchange (forex) market, traders buy and sell currencies in pairs. The most traded currency pairs are known as the major currency pairs, which consist of seven currencies that account for about 80% of the forex market. However, there are 28 major and minor currency pairs that are traded in the forex market. Understanding these currency pairs is essential for any forex trader to make informed trading decisions.

What are the 28 Currency Pairs
What are the 28 Currency Pairs

The Three Categories of Currency Pairs

The 28 currency pairs are divided into three categories: majors, minors, and exotics. The majors are the most traded pairs, consisting of seven currencies: the US dollar (USD), the euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Swiss franc (CHF), the Canadian dollar (CAD), and the Australian dollar (AUD). These currencies are the most liquid and widely traded, and they are often used as a benchmark for measuring the strength of other currencies.

Major Currency Pairs

The most popular currency pair is the EUR/USD, which accounts for about 30% of all forex trades. The other major currency pairs include USD/JPY, GBP/USD, USD/CHF, USD/CAD, and AUD/USD. These pairs are known for their high liquidity, tight spreads, and low volatility, making them popular among traders.

Minor Currency Pairs

The minors, also known as the cross-currency pairs, are currency pairs that do not involve the US dollar. These pairs are made up of the major currencies, and they are often used to hedge against currency risk or to speculate on the relationship between two economies. Examples of minors include EUR/GBP, GBP/JPY, and AUD/NZD.

Exotic Currency Pairs

The exotics are currency pairs that involve one of the major currencies and a currency from a developing or emerging market. These exotic currency pairs are less liquid and more volatile than the majors and minors, and they are often traded for their high potential returns. Examples of exotics include USD/ZAR, USD/MXN, and USD/TRY.

Understanding the Relationship Between Currencies

When trading forex, it is important to understand the relationship between the two currencies in a pair. Each currency has its own economic and political factors that can affect its value, such as interest rates, inflation, and geopolitical events. For example, if the US Federal Reserve raises interest rates, the USD may appreciate against other currencies. Conversely, if the European Central Bank announces an economic stimulus package, the EUR may weaken against other currencies.

Technical and Fundamental Analysis

Traders use technical and fundamental analysis to analyze currency pairs and make trading decisions. Technical analysis involves using charts and indicators to identify trends and patterns in price movements, while fundamental analysis involves analyzing economic data and news events to understand the underlying forces that drive the currency markets.

Conclusion

In conclusion, the 28 currency pairs that are traded in the forex market can be classified into three categories: majors, minors, and exotics. The major currency pairs are the most traded and liquid, while the minor currency pairs and exotics are less liquid and more volatile. Understanding the relationships between currencies and the factors that affect their value is crucial for successful forex trading. Traders should use a combination of technical and fundamental analysis to make informed trading decisions and manage their risk.

 

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