There are seven major currency pairs traded globally, and all have nicknames. Traders choose them depending on their trades in the forex market. But generally, four currency pairs are never missed out. This is because they are traded in huge volumes and represent the world’s biggest economies. They include:
EUR/USD: The Euro and US dollar
The EUR/USD currency pair has a positive correlation with the GBP/USD and a negative correlation with the USD/CHF. The euro, the British pound, and the Swiss franc all have a positive correlation.
USD/JPY: The US dollar and Japanese Yen
The USD/JPY has generally been the second most commonly traded pair. Political tensions between the United States and the Far East have been a source of concern for this pair. Because the US dollar is the base currency in all three pairings, the pair tends to be favourably connected with USD/CHF and USD/CAD.
GBP/USD: The British pound sterling and US dollar
The GBP/USD pair has a positive connection with the EUR/USD and a negative correlation with the USD/CHF. This is because the British pound, Swiss franc, and euro all have a positive correlation.
USD/CHF: The US dollar and Swiss Franc
USD / CHF is the currency pair made up of US dollars and Swiss francs. The currency pair shows how many Swiss francs (the quote currency) it takes to buy one US dollar (the base currency). Trading the USD / CHF currency pair is also known as “Swissie” trading.
AUD/CAD: The Australian dollar and Canadian dollar
The AUD / USD currency pair tends to have a negative correlation with the USD / CAD, USD / CHF, and USD / JPY pairs, as the US dollar is the quoted currency in these cases. The correlation with USD / CAD is also due to the fact that both the Canadian and Australian dollars have a positive correlation with each other, as they are both commodity block currencies.
NZD/USD: The New Zealand dollar and US dollar
NZD / USD. The value of the NZD / USD pair is reported as 1 NZ dollar for every X US dollar. For example, if the pair is trading at 1.50, it means that $ 1.50 would be needed to buy NZ $ 1.
USD/CAD: The US dollar and Canadian dollar
Because the US dollar is the quote currency in these other pairs, the USD/CAD currency pair has a negative correlation with the AUD/USD, GBP/USD, and EUR/USD currency pairs.