Italiano (Italiano)Additionally, in 2023, it boasted a high daily trading volume, accounting for approximately 11% of the forex market, nearly equal to that of the USD/JPY pair. The most traded forex pairs, typically involve currencies from the world’s largest economies and financial centers. Understanding key details about the most traded forex pairs is fundamental for traders to effectively navigate the dynamic currency markets. Our free currency volatility meter helps you identify which currencies are volatile and which currencies are quiet.
CAD/JPY (Canadian Dollar / Japanese Yen)
This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. Tastyfx accepts no responsibility for any use that may be made of these comments and for any consequences that result. It is important to note that volatility can have an inverse relationship with liquidity. This is because high volatility often leads to uncertainty and unknowns in the market, causing market makers to widen their bids and offers. Similarly, volatility can also change intraday depending on which markets are open.
- This was exacerbated by the election of Jair Bolsonaro – a far-right populist – to the presidency in January 2019.
- The Pound is affected by the UK’s economic policies, while the Australian dollar is influenced by commodity prices and trade relations within the Asia Pacific region.
- Use the table to analyze, sort and compare the different volatility pairs.
- “Volatility is not just about risk – it’s about opportunity quantification,” explains Dr. Rachel Thomson, Professor of Financial Markets at London School of Economics.
EUR/USD – Volatility: 6.6%
Volatile currency pairs can offer lucrative opportunities, but they also come with higher risks. Volatile currencies that are sensitive to economic and political news are ideal for traders who base their decisions on the release of economic data or key events. It’s always important to know which currency pairs are the most volatile to develop a strategy for those who love quick movements in the markets. Here are some pairs that are probably going to be especially volatile in 2025 and can bring good profits if you know how to work on risks. VT Markets offers a reliable platform with advanced tools, competitive spreads, and fast execution, making it ideal for trading volatile forex pairs.
Ranging Markets
It operates 24 hours a day, allowing traders to speculate on the price movements of various currency pairs. While some currency pairs exhibit relatively stable price movements, others are known for their high volatility, which presents both risks and opportunities for traders. Throughout my decade of trading volatile forex pairs, I’ve discovered that success in this challenging market segment requires a sophisticated blend of technical expertise and disciplined risk management.
Leverage magnifies this risk even more, and slippage can occur when there is a gap between the expected price and the actual trading price, which may decrease profits or increase losses. To effectively trade USD/TRY, one must comprehensively comprehend Turkey’s geopolitical developments and macroeconomic factors. Employing breakout strategies to identify substantial shifts during economic updates or policy alterations can benefit traders. The central bank operations and inflation rates substantially influence the currency pair dynamics, resulting in abrupt fluctuations of exchange rate values. Global risk sentiment can be accurately gauged through the AUD/JPY pair.
- If the forex pair USD/JPY is quoted at 150, it means that 1 USD (the base currency) is equivalent to 150 Japanese yen (JPY – the quote currency).
- Economic policies, inflation rates, and political instability in Turkey contribute to the high volatility of the USD/TRY pair.
- Typically, statistical tools such as standard deviation and indicators like ATR (Average True Range) are used to measure volatility, accurately reflecting the price dynamics and movement.
- Many successful traders combine multiple volatility metrics to get a more comprehensive view of market conditions and potential price movements.
Here we will talk about the most volatile currency pairs in the Foreign Exchange (Forex) market in 2023.
However, it’s also important to be aware of the increased risk during these times. For example, in highly volatile markets, smaller position sizes can reduce the impact of adverse price movements on your overall portfolio. The USD/TRY pair remains extremely volatile due to Turkey’s ongoing economic struggles, including high inflation, currency depreciation, and political instability.
Traders often monitor these pairs closely for potential opportunities, while employing strict risk management strategies to mitigate potential losses. The price of most volatile currency pairs forex pairs is primarily affected by the supply and demand for the respective currencies, driven by factors like economic data, interest rate decisions, and geopolitical events. Central bank policies, such as monetary easing or tightening, significantly influence currency strength. Market sentiment, including risk appetite or aversion, also plays a role, with traders reacting to global events like trade agreements or conflicts. Additionally, factors like commodity prices can impact currencies tied to resource-based economies, such as the Australian or Canadian dollar.
It is crucial to approach volatile markets with a disciplined trading plan and sound risk management practices. This is especially true when we see any key policy statements made in Britain. Changes in the price of this currency pair depend on the economic condition of the UK and EU economies, their trade relationships, and inflation rates. The pair is influenced by monetary policies, particularly interest rates set by the European Central Bank (ECB) and the Bank of England (BoE) as well as the economic conditions of both countries.
Volatility Filter
Scandinavian currencies like the Swedish Krona are vulnerable to sizeable moves against the US Dollar. With pip swings averaging 140 per day, GBP/CHF offers opportunities for short-term gains. The final pair on our list – USD/MXN – puts the US dollar against the Mexican peso. Tensions between these two countries have risen ever since US President Donald Trump won the 2016 presidential election. More recently, a series of tariffs have been implemented on Mexican exports to the US, as well as a series of threats against Mexican immigrants trying to get into the US via its southern border. A knock-on effect of the US’s trade war with China has been that Australian imports to the Chinese markets have fallen.
Sharp price fluctuations can lead to significant losses if trades move against you, especially when high leverage is used. Trading Futures and Options on Futures involves a substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions, market data, and recommendations are subject to change at any time. This capacity enables experienced traders to revise tactics and change positions swiftly according to conditions which sets them apart whenever they are trading under unpredictable markets. To overcome this unpredictability, traders need to cultivate flexibility in their approaches while closely monitoring fluctuations in market sentiment indicators.
However, while increased volatility may offer more scope to realise a profit, it can also increase a trader’s exposure to risk. Nicknamed “The Dragon” for its wild price swings, the GBP/JPY pair is highly sensitive to economic and political developments in the UK and Japan. The pair’s volatility is often linked to risk sentiment, as the Japanese Yen serves as a safe-haven currency while the British Pound reacts strongly to geopolitical events like Brexit negotiations. For instance, during the height of Brexit uncertainty, GBP/JPY experienced massive intraday fluctuations, making it a favorite among experienced traders seeking volatility.
If the liquidity of a trading instrument is lower, the validity of technical analysis comes into question. The fact is that various methods of technical analysis might not work in such situations. If you decide to trade, say, USD/SEK or GBP/NZD, your analysis may not work as effectively as, for example, when trading EUR/USD. There are times when the currency price stands still or moves within a very narrow range.
Stay on top of upcoming market-moving events with our customisable economic calendar. Discover how to increase your chances of trading success, with data gleaned from over 100,000 IG accounts. With the 2020 US election approaching, it is likely that this pair will remain volatile as Trump turns to his flagship immigration policies in order to energise his base for his re-election campaign.