Understanding the characteristics of currency pairs is key to success in FX trading. Each currency pair has unique price movement patterns and influencing factors, and having appropriate knowledge enables more effective trading.
USD/JPY (US Dollar/Japanese Yen)
One of the most traded currency pairs in the world. The most familiar currency pair for Japanese investors.
Characteristics
- High liquidity with narrow spreads
- Relatively stable price movements
- Easily affected by Japan-US interest rate differentials
- Recommended for beginners
- Active during Tokyo and New York market overlap
Trading Hours
Actively traded in Tokyo market (9:00-15:00) and New York market (22:00-6:00). Large price movements can be expected especially around 22:30 JST when US economic indicators are announced.
EUR/USD (Euro/US Dollar)
The most traded currency pair in the world. Reflects the economic conditions of Europe and America.
Characteristics
- World's largest trading volume
- Sensitive to ECB (European Central Bank) and FRB (Federal Reserve Board) policies
- Large price movements when economic indicators are announced
- Technical analysis works well
- Most active during London and New York market overlap
Key Economic Indicators
US employment statistics, FOMC policy rate announcements, ECB policy rate announcements, Eurozone GDP, US GDP, etc. are important influencing factors.
GBP/JPY (British Pound/Japanese Yen)
A highly volatile currency pair also called the "widow maker". For advanced traders.
Characteristics
- Very large price movements (high volatility)
- Sensitive to Brexit-related news
- Most active in London market
- Risk management is important
- Possibility of large profits/losses in short time
Trading Notes
Due to high volatility, appropriate position sizing and strict stop-loss settings are essential. Beginners are recommended to trade after gaining sufficient experience.
AUD/JPY (Australian Dollar/Japanese Yen)
As a resource currency, this currency pair is easily affected by commodity prices and the Chinese economy.
Characteristics
- Correlates with gold and iron ore prices
- Affected by Chinese economy (Australia's largest trading partner)
- Popular as high interest rate currency (targeting swap points)
- Sensitive to risk-on/risk-off sentiment
- Tends to move at Oceania market opening (early morning)
Influence Factors
RBA (Reserve Bank of Australia) policy rates, China's GDP growth rate, commodity prices (especially iron ore and coal), Australian employment statistics, etc. are important.
CAD/JPY (Canadian Dollar/Japanese Yen)
A resource currency pair with a close relationship to oil prices.
Characteristics
- High correlation with oil prices (WTI)
- Also affected by US economy (neighboring country)
- Relatively stable price movements
- Sensitive to Bank of Canada policies
Currency Pair Selection Points
It's important to select currency pairs according to your trading style and experience level:
- Beginner：Start with USD/JPY, EUR/JPY - Rich information and relatively predictable price movements
- Intermediate：Challenge EUR/USD, AUD/JPY - Analysis considering more diverse factors required
- Advanced：Aim for big profits with GBP/JPY, GBP/USD - High risk management ability required
- Swap Targeting：High interest rate currency pairs like AUD/JPY, NZD/JPY
- Scalping：High liquidity pairs like EUR/USD, USD/JPY
Learn FX Basics
For those who want to learn more about FX trading basics and risk management, please also see the beginner guide:
Let's Check with Actual Charts
After understanding the characteristics of each currency pair, check the price movements with actual charts. ChartLite allows you to monitor multiple currency pairs simultaneously.