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Forex most volatile pairs – what are they?

Forex most volatile pairs – what are they?

The currency market is particularly volatile. Trading Forex’s most volatile pairs is a great opportunity for profit. In this article we will see what are the most volatile Forex pairs. But before we see what the most volatile pairs in Forex are here is a quick reminder of what volatility is. 

What is volatility in Forex?

Volatility measures the amplitude of price variation over a given period. This indicator also reveals the level of risk associated with a currency pair. High volatility signals a high risk of variation.

Volatility is an essential element that the trader can use to carry out trades. Thus, the “scalpers” are particularly attentive to the most volatile currency pairs. The latter must have a high volatility threshold and the lowest possible spreads to minimize the costs associated with each transaction. Whatever the trading style, it is necessary to adapt your strategy to market conditions.

There are however several things to be aware of before opening a position on a volatile pair. First, these pairs have lower liquidity on the market. Not every trader is prone to taking risks on volatile pairs. But with a well-thought trading system and wise risk management, you have nothing to fear about.

Three currency pairs categories – which is the most volatile

In the forex market, currencies are organized into three main categories: major currency pairs and minor currency pairs on the one hand and exotic pairs on the other.

Major pairs: EUR-USD; USD-JPY; GBP-USD; USD-CHF; USD-CAD; AUD-USD; NZD-USD. These are, therefore, the currency crosses of the eurozone, the United States, Japan, the United Kingdom, Canada, Australia, and New Zealand.

Minor currency pairs, also known as cross-currency pairs, do not include the U.S. dollar but at least one of the world’s other three major currencies. Some of the examples: GBP/AUD, AUD/JPY,CAD/JPY.

Exotic currency pairs: USD-HKD; USD-SGD; USD-ZAR; USD-THB; USD-MXN; USD-DKK; USD-SEK. Exotic pairs are currency pairs that incorporate a major currency against a currency from an emerging country. The crosses mentioned are the currencies of Hong Kong, Singapore, South Africa, Thailand, Mexico, Denmark, and Sweden. These pairs come with most volatility.

As an indication, note that among the incredible trading volume the foreign exchange market generates daily, the most traded pairs are the following: EUR-USD, USD-JPY, GBP-USD, AUD-USD, and USD-CHF.

It’s quite difficult to sum up all the volatile pairs. But some of them have historically high volatility like the following :


If you are a beginner trader, we urge you to start with the major pairs. They are indeed much less unpredictable and, therefore, easier to trade. Once more seasoned, you can quite get started on exotic pairs. However, be very careful because these currencies can be very volatile.

Exotic Forex pairs – Forex’s most volatile pairs

In these pairs, the U.S. dollar is usually paired with a currency from an emerging economy that is thinly traded against other major currencies. Exotic pairs include USD/TRY (U.S. Dollar/Turkish Lira) and USD/MXN (U.S. Dollar/Mexican Peso).

The lack of liquidity in these markets makes these pairs more expensive to trade. This means they have larger spreads (differences between bid and ask prices). However, high-interest rate spreads, and frequent price swings mean that these pairs generally offer good opportunities for returns. Although a higher risk factor is involved in these markets, only the most experienced traders generally trade these currency pairs.

Besides USD/MXN and USD/RUB, two important and well-known exotic currency pairs in this category, other such currency pairs can also offer good opportunities.

Below we will briefly analyze 5 exotic currency pairs found in Forex traders’ portfolios, especially experienced ones.

Overview of some of the most volatile Forex pairs

Euro / Turkish Lira (EUR/TRY)

The historic volatility of the EUR/TRY crossover has attracted traders. Today, this volatility has stabilized somewhat, thanks to the euro zone’s monetary policy but there are still interesting trading opportunities. The complex history of the TRY means the currency can swing as the country continues to struggle for financial stability.

The EUR/TRY currency pair represents the value of the Euro against the New Turkish Lira. EUR is the base currency and TRY the counter currency. TRY is sometimes referred to as YTL in the foreign exchange market. The new Turkish lira is broken down into 100 new Kurus coins.

U.S. dollar / Thai baht (USD/THB)

The USD/THB currency pair performed very well in 2019 amid pressure from deteriorating US-China relations resulting from their trade war and a global slowdown. According to a 2019 Bloomberg analysis, the Thai baht is one of the few currencies in emerging economies that has reacted less to the Chinese economic slowdown. This has made USD/THB a safe haven whenever there is an escalation in trade clashes between the U.S. and China.

Low-yielding Thai bonds, along with the large current account surplus and foreign exchange reserves, helped boost the baht’s value in the currency market. Thailand is another important emerging economy with a strong export economy. It is Asia’s eighth-largest economy, with the lowest unemployment rates in the world. Thai exports include electronics, machinery, and wood, and its trading partners are the United States, China, Hong Kong, and Japan. The monetary policy of the Bank of Thailand also influences the THB and, therefore, the USD/THB currency pair.

Pound sterling / South African rand (GBP/ZAR)

The price of the British Pound / South African Rand (GBP/ZAR) currency pair largely depends on the Bank of England’s interest rate decisions. The British central bank’s cut in interest rates can generate high volatility. The 2016 Brexit referendum sent the currency pair to its lowest since 2013.

In the early years, the rand’s value was closely linked to the price of gold, South Africa’s biggest export. However, during the financial crisis of 2008, it lost nearly 50% against the U.S. dollar.

Its correlation with the price of gold continues to this day. Gold and platinum mining, along with agriculture, is a major revenue-generating sector in South Africa. However, both sectors remain marked by political uncertainties and weather-related issues.

Currently, South Africa has a thriving banking sector, as well as a manufacturing industry. The automobile industry represents 10% of its exports.

GBP/ZAR traders should remain vigilant of South Africa’s unemployment rate, which is currently one of the highest in the world at around 30%. The country’s central bank focuses on two main issues: South Africa’s high inflation rate and unemployment.

Japanese yen / Norwegian krone (JPY/NOK)

Although little known, the JPY/NOK is another interesting currency pair. The low borrowing cost of the Japanese yen, due to its low-interest rates, makes this currency popular with stock and commodity traders worldwide. It is a safe haven currency when trading with the U.S. dollar, and it is very popular in times of political and economic uncertainty, such as the current coronavirus pandemic. The yen is also a very popular carry trade currency.

The Norwegian economy is heavily dependent on oil exports. When oil prices rise, the krone strengthens against other currencies and vice versa. Also, Norway is a major exporter of petroleum products, metals, chemicals, and ships to countries like Germany, France, the United Kingdom, and the United States. Due to its proximity to and reliance on North Sea oil, traders have found that there is often a strong correlation between the GBP and NOK currencies.

Australian dollar / Mexican peso (AUD/MXN)

The AUD/MXN is a highly traded exotic currency pair. It reflects the value of the base currency, AUD, against the counter currency, MXN. The Aussi is the fifth most traded currency, with relative stability, while the Mexican peso provides liquid access to South America, whose market has grown rapidly in recent years.

Forex most volatile pairs – Bottom Line

Exotic currencies should be traded with extreme risk management measures, as they do not have the same market depth and liquidity as other currency pairs, especially larger ones. These emerging nations’ political and economic instability also makes them extremely volatile. Their high volatility, especially during major geopolitical events, means that trading these pairs carries a level of risk that only the most experienced traders can handle.

Before trading exotic currency pairs such as those described in this article, the trader should investigate and ensure that he has carefully studied the currency pairs he is interested in, how they behave regularly, and what factors and market events can cause the most violent fluctuations in their exchange rates and produce the most profit or loss.

If you’re unsure how to manage the risks associated with these currency pairs, it’s best to first limit yourself to the larger, usually less volatile currency pairs.

Forex most volatile pairs – FAQ

What is volatility in Forex?

Volatility measures the amplitude of price variation over a given period. This indicator also reveals the level of risk associated with a currency pair. High volatility signals a high risk of variation.

Which currency pair has more volatility?

Exotic currency pairs are the most volatile. Exotic currency pairs: USD-HKD; USD-SGD; USD-ZAR; USD-THB; USD-MXN; USD-DKK; USD-SEK. Exotic pairs are currency pairs that incorporate a major currency against a currency from an emerging country. The crosses mentioned are the currencies of Hong Kong, Singapore, South Africa, Thailand, Mexico, Denmark, and Sweden. 

What is the most actively traded forex pair?

The most trader Forex pairs are:

EUR/USD (euro/US dollar)
USD/JPY (US dollar/Japanese yen)
GBP/USD (British pound/US dollar)
AUD/USD (Australian dollar/US dollar)

What pairs move 100 pips a day?

As for the cross rates, GBP/AUD,GBP/NZD, GBP/JPY, GBP/CAD move on average for more than 100 points per day.

What is the least volatile forex pair?

Some currency pairs are more volatile than others, while others are relatively stable. The least volatile forex pair is the USD/CHF. 


The post Forex most volatile pairs – what are they? appeared first on FinanceBrokerage.

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