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Top 5 Most Traded Currencies In Forex

Dominion Markets provides access to the top most traded currencies in the world. Discover which currencies take center stage in online trading and their core strengths.

1. US DOLLAR (USD)

The US dollar is the most traded currency in the forex market, with a daily volume of over $6.6 trillion worldwide. The dollar has such a strong hold on foreign exchange markets that it is included in all "major" currency pairs. The US dollar and one of the other six currencies on this list make up each of the six major currency pairs. Approximately 85% of all FX trades comprise these key pairs.

After the Second World War, the US dollar became the dominant currency in the world economy. At the time, 50% of the world economy was produced in the US. As a result, other nations started using dollars for international trade to avoid paying currency conversion fees. Most significant commodities markets worldwide are still priced in US dollars, adhering to the dollar standard.

Most of the currency reserves maintained by central banks worldwide today are USD. Central banks and other large financial organizations use currency reserves. These reserves are hoards of foreign currencies to support their own currency's value and to facilitate international trade. Various significant currencies, including the euro, pound, and yen, are included in foreign exchange reserves in addition to the US dollar.

Popular Usd Pairs

The US dollar and the Japanese yen make the USD/JPY currency pair, also called "the gopher." With 13.2% of all forex transactions made daily, it is the second most traded pair on the market. You can trade this currency pair on Dominion Market’s cTrader platform.

USDJPY on Dominion Markets

USDJPY on Dominion Markets

2. EURO (EUR)

The euro is the second most traded currency. It has an average daily trading volume of almost $2.3 trillion. 19 EU member states use this currency. It is overseen by the European Central Bank (ECB).

Euro-member states can avoid currency conversion costs while trading using the same currency. This promotes economic activity and boosts GDP growth within EU member states.

Nonetheless, there can be drawbacks to so many nations using the same currency. One could argue that the euro is more stable since many nations back it. However, if any of those nations face severe economic downturns, this could backfire. If one country in the Eurozone faces economic problems, other countries must help them, or they risk the spread of instability.

Popular Eur Pairs

Dominion Markets has several EUR pairs, including EUR/GBP and EUR/JPY. However, EUR/USD is the most traded currency pair on the market. The European Single Market and the US economy are the two most important in the world, making the EUR/USD pair attractive to traders.

EURUSD on Dominion Markets

EURUSD on Dominion Markets

3. JAPANESE YEN (JPY)

The average trading volume of the Japanese yen is $1.2 trillion daily, making it the third most traded currency. Additionally, Japan's GDP rate is the third highest in the world. Due to its long history and strong economy, investors sometimes want to put their money into this country as a safe haven.

Because of low consumer demand and an aging population, the yen is well-known for having a low inflation rate. Consequently, the Bank of Japan (BoJ) keeps interest rates incredibly low, sometimes even negative. Traders use the carry trade strategy to profit from interest rate differences by borrowing yen due to its low interest rate.

The Bank of Japan controls foreign exchange trades to stabilize the yen's exchange rate and provide low interest rates.

Additional factors influencing the yen's value include the announcement of BoJ meetings, GDP statistics, unemployment rates, and local industry production. Japan is a world leader in producing autos, photographic gear, and integrated circuits.

It is important to remember that Japan is a significant importer of crude oil from the Middle East. Geopolitical tension in the region or a rise in the price of crude oil could harm Japan's economy.

Popular Jpy Pairs

The EURJPY is a popular Japanese Yen pair that you can trade on Dominion Markets. Traders who trade this pair focus on factors that impact trade between Japan and the Eurozone and economic indicators.

EURJPY on Dominion Markets

EURJPY on Dominion Markets

4. BRITISH POUND STERLING (GBP)

The pound sterling is the official currency of the UK and its territories. It is the fourth most traded currency in the world, with an average daily volume of around US$422 billion. With an estimated 4.5% of all worldwide reserves by value, it is also the fourth-largest reserve currency.

The pound's value depends on the UK economy, including reports on employment, GDP, inflation, and the Bank of England's monetary policies.

Popular Gbp Pairs

The most traded pound pair is GBP/USD. Deep-sea cables were previously utilized to transmit bids and quotes between London and New York. As a result, the GBP/USD exchange rate became known as "cable."

GBPUSD on Dominion Markets

GBPUSD on Dominion Markets

5. AUSTRALIAN DOLLAR (AUD)

The Australian dollar is the fifth most traded currency in the world, with an average daily volume of US$223 billion. It is the national currency of Australia. The currency controlled by the Reserve Bank of Australia holds 1.8% of the world's reserves by value, making it the sixth most widely held reserve currency.

Commodity prices and the "terms of trade" greatly impact the Australian dollar's value. Changes in trade volumes and prices of these commodities can impact the Australian dollar (AUD). Australia heavily imports oil and exports coal, iron, copper, and other mined commodities.

Popular Aud Pairs

AUD/USD is sometimes called the "Aussie." It comprises the Australian dollar and the US dollar. The value of Australia's exports directly influences the value of the pair.

AUDUSD on Dominion Markets

AUDUSD on Dominion Markets

Most experienced traders trade the major currencies in the Forex market. Their movement is more stable and has stood the test of time. Join the Dominion Markets and hone your trading skills with all the major currencies.