The Most Volatile Currency Pairs and How to Trade Them Effectively

most volatile currency pairs

The more volatile a market, the riskier it is considered to be and the higher return you can expect if you invest in that market. The US Dollar against the Brazilian Real is volatile due to frequent price movements between the pair. The Brazilian Real is very volatile because it is backed by an emerging economy that is quite unstable. Brazil also has a commodity-backed economy, and its currency value is affected by the demand for commodities. On the contrary, JPY is considered a safe haven for traders during high market volatility due to its relatively stable economy, cheap exchange rate, and low interest rate. Volatile currency pairs have high volatility in the forex market and they fluctuate by larger pips within a given period.

As a general rule, the higher the liquidity of a currency pair, the lower the volatility. This is because the higher the amount of supply and demand, the harder it is to get a price moving. Furthermore, because Japan is a major importer of oil, the cost of purchasing Canadian dollars in yen tends to rise as the price of oil rises. This is because as oil prices rise, more yen must be exchanged into CAD to purchase a single barrel of oil, leading the CADJPY rate to climb as well. In forex trading, volatility refers to the frequency and magnitude of changes in a currency’s value.


CAD/CHF, EUR/CHF, AUD/CHF, and CHF/JPY are the less volatile Forex pairs among the cross rates. You can select any pair and see the statistics over different periods. If you have ever traded in the Forex market or at least watched price movements from the sidelines, you might have noticed that the prices move non-linearly on the chart.

You only need to deposit a minimum of $10 on eToro, and the broker supports a wide range of both deposit and withdrawal options. If you are looking to start trading forex today, we recommend registering a trader account with either of the following reliable and multi-regulated forex trading platforms. It is also relatively moderate when there is a lot of actionable news about the Mexican or US economies. But the pair’s buy and sell price turns erratic as soon as the market calms down and trading volumes reduce. The AUD/JPY sets two of the most commonly traded currencies in the world against each other.


Suppose you want to acquire shares from a (fictitious) French food company called Food from France. The shares are trading at €50, which means that with the current exchange rate, €50 is equal to £45.02 (50 x 0.9004). If you bought 100 shares, your initial outlay would be £4502 (100 x £4502). So, when you “BUY” the currency pair, you are ideally selling the quote currency, which is the Japanese Yen and buying the base currency – which is the Canadian Dollar.

The MXN takes third place in the list of the most-traded currencies in the Americas, following the USD and the CAD. In 2023, Mexico remains the second-largest trading partner of the US. Traders should keep in mind that the peso’s attractive yields diminish with each rate hike by the Federal Reserve. MarketMilk™ is a visual technical analysis tool that simplifies the process of analyzing market data to help forex and crypto traders make better trading decisions.

Most Volatile Currencies Of 2022 – FXCM

Most Volatile Currencies Of 2022.

Posted: Mon, 19 Sep 2022 07:00:00 GMT [source]

Rather than liquidate their entire position, which could be a considerable amount, they will enter another trade to offset any losses they see coming up and protect their long-term gains. The most liquid currency pairs with the least price fluctuation usually involve the Euro, Swiss Franc, and British Pound. The most popular and commonly traded forex pair has to be the EUR/IUSD pair. It accounts for as much as one-third of the total daily forex trades. Some of the factors influencing the FBP/NZD price action and which you ought to consider when trading the pair include the GDP growth of Britain, New Zealand, China, and Australia.

List of volatile forex pairs

However, with a well-thought-out trading plan and risk management strategy in place, there is little to fear from volatile currency pairs. The forex market is among the most liquid markets, and as a trader, you will make the fundamental decision of choosing the most volatile currency pairs when trading. Now, if you are a new trader, you probably have no idea about the volatility of currencies. The least volatile currency pairs have a lower forecasted volatility over a 10-year average. These pairs have relatively high liquidity, decreasing their volatility compared to the most volatile pairs.

most volatile currency pairs

JPY is known for its historically low interest rate compared to the frequent increase in the AUD interest rate. Recently the Australian Reserve Bank announced a massive rise in its interest rate by 1.35 percent. Given this significant risk of foreign bonds, investors might want to steer clear of them. However, foreign stocks can offer a different opportunity since stocks can grow faster and offer more upside. When a country’s currency is more robust (relative to the foreign bond’s currency), the value of the bond and its future interest payments can be significantly reduced.

Top 5 Most Volatile Currency Pairs in 2022

Before the initiation of recognized currencies, trade and barter used to be the norm. While the value of the New Zealand dollar is heavily reliant on the nation’s economic situation/ exportation of commodities. This disparity between the two currencies leads to a high level of volatility. most volatile currency pairs As for the Australian dollar, its worth is heavily dependent on the economy of the nation’s large degrees of fluctuations. All of these products have a high all year round, sustaining the demand for the currency. Investors turn to these in times of hardship for financial security.

South African gold exporters will gain more dollars when trading with the world market. Nonetheless, buying US dollars with South African Rand becomes more expensive. The price of gold affects the volatility in the US Dollar against the South African Rand.

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However, the desirability and strength of the AUD and the JPY have made the pair particularly attractive. The majority of this volatility comes from speculation around short term events. Because these events are so unpredictable, many traders attempt to predict what will happen and how it will affect currencies. This activity can cause wild price swings, especially when economic policy is involved. This shows that as always, it is important to keep an eye on political news and other unpredictable events that could affect your trading strategy. Major market events or economic events in a country can affect its currency and all the currency pairs linked to it.

  • Pairs of various countries are traded/ compared against one another and are referred to as currency pairs.
  • No representation or warranty is given as to the accuracy or completeness of the above information.
  • When trading the USD/MXN pair, understand that the value of the Peso is deeply tied to the country’s exports – especially oil.
  • However, foreign stocks can offer a different opportunity since stocks can grow faster and offer more upside.
  • The picture below illustrates the highly volatile EUR/AUD currency pair.
  • Most brokerages will also let you margin trade these currencies – implying that you only need to raise a fraction of the required trade amounts, and the broker will loan you the rest.

You will also need to monitor economic growth for both South Africa and the United States. When trading the GBP/JPY trading pair, nevertheless, consider such factors as the economic performance of both the Japanese and British economies. You also need to monitor the global economy as it affects the value of the YEN – considered the safe haven currency. Over the past few years, the USD/TRY currency cross went from being a moderately traded and relatively stable pair to one of the most volatile fx pairs.

What factors affect the volatility in currency trading?

Currency volatility is measured by computing the standard deviation or variance of currency price movements over a given period. A higher volatility means more significant price swings, suitable for trading. Investors should also look at the true average range and the spread as a percentage of the spot price. When trading the USD/MXN pair, understand that the value of the Peso is deeply tied to the country’s exports – especially oil.

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