Top 10 Most Volatile Currency Pairs and How to Trade Them

This scenario means that there are financial instruments that will inherently have higher volatility than others (crude oil, gold, USDNOK, etc). So, eventually, a high-interest rate environment will produce an economic recession. Remember that the pandemic led to widespread shutdowns of various sectors of countries’ economies.

Minor currencies include cross pairs of any two currencies in major pairs except for USD. Use the table to analyze, sort and compare the different volatility pairs. You can define min and max levels to easily filter out the irrelevant date for your trading strategy. Volatility is the difference between the high and low values of a price in a symbol. To stay ahead in an unstable currency market, traders should monitor modifications to monetary policies, global relationships, and economic advancements.

The United States dollar and South African rand pairing revolve around the value of gold. Gold and other precious minerals are some of South Africa’s most volatile currency pairs top exports, and gold is priced in USD. So, when the US economy strengthens, it detracts from gold’s price and by association the value of the rand. Both currencies are most active during the Tokyo session, which overlaps with the Sydney session. The pair also represents two of the largest economies active during the session, while many other global markets are relatively dormant. Some key methods include applying indicators to your charts such as the average true range (ATR), the relative strength index (RSI) and Bollinger bands.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice.

The “Fibre” or EUR/USD pair is influenced by the economic activities of both the Eurozone and the United States. The decisions related to interest rates made by the European Central Bank and Federal Reserve, GDP numbers, and employment all significantly affect the volatility. We have researched several forex pairs to find the ones that are the most volatile in the market. CAD/CHF, EUR/CHF, AUD/CHF, and CHF/JPY are the less volatile Forex pairs among the cross rates.

Moreover, monitoring changes in currency correlations is vital, as correlations can shift over time due to changing market conditions, economic events, or geopolitical factors. Regularly reviewing and adapting to these fluctuations allows traders to make informed decisions and respond to potential shifts in volatility and risk. By integrating currency correlation analysis into their trading approach, traders can gain a deeper understanding of market dynamics and improve their ability to navigate the complexities of the forex market. For traders seeking a more stable trading environment with lower risk exposure, major currency pairs offer an attractive option.

Policies

Access to cheaper capital and cheap or free money from the various stimulus programs led to a situation where a lot of money was chasing very few goods and services. The world’s most traded currency pair, EUR/USD also sees healthy daily movement averaging 70 pips. While not the biggest swings, it offers several benefits for volatility traders. Illiquid, exotic pairs with lower trading volume tend to be more volatile. In contrast, the major pairs with the highest volume typically have lower volatility. The number of market participants can determine the volatility of a pair.

USD/TRY (US Dollar/Turkish Lira)

This is the earning potential that trading off a long-term chart on the most volatile currency pairs can do. Not only will you not have to be staring at charts all day long, you can be sure of a sustained, lengthy move that delivers a sizeable profit when the move goes in your direction. In between the cycles of rate cuts and rate hikes by central banks, there are always the market expectations of where interest rates will go, and the scale of rate hikes, pauses or reductions and for how long. These expectations drive volatility in the currency pairs with volatile nature, and when the changes are eventually made to the interest rates, they produce very volatile price action on these currency pairs.

1. Central banks were forced to respond to the inflationary trends by raising interest rates, some to levels that had not been attained in two or three decades.
2. In contrast, the Japanese yen has long been perceived as a safe haven, with its worth increasing when signs of global instability occur.
3. It can experience significant volatility during major news releases and events impacting either economy.
4. This is because when one currency strengthens, the other currency in the pair also tends to appreciate, leading to relatively stable price movements.
5. For instance, during a time of global economic stability, I used EUR/USD to gradually build profits without the constant need to monitor the market minute by minute.
6. Use smart position sizing, place logical stops, and scale out of winning volatile trades while diversifying across various volatile instruments.

AUD/JPY (Australian Dollar / Japanese Yen)

1. The volatility inherent in the forex market presents a dual-edged sword for traders.
2. Here are the different parts of the strategy component of trading when handling the most volatile pairs.
3. This article represents the opinion of the Companies operating under the FXOpen brand only.
4. Understanding and managing this balance is crucial for successful Forex trading.
5. Suppose these patterns play out over several days or weeks and eventually reach their price objective.

Technical analysis involves analyzing historical price data, chart patterns, and indicators to identify potential entry and exit points. By combining technical analysis with an awareness of market volatility, traders can gain a deeper understanding of price behavior and make more accurate predictions. To prepare for such events, traders should regularly refer to economic calendars, which provide schedules of upcoming news releases and events. These calendars highlight key economic indicators, central bank meetings, and other significant announcements that could potentially affect the forex market. By keeping track of these events, traders can anticipate periods of increased volatility and adjust their trading strategies accordingly.

GBP/USD – Volatility: 7.7%

All transactions in the forex market, including selling, buying, or trading, occur through currency pairs, for example, EUR/USD; GBP/CAD; and USD/JPY. Identifying the most volatile currency pairs is the first step towards leveraging the opportunities presented by market fluctuations. A definitive list of the most volatile currency pairs is hard to collate, chiefly because volatility can affect different currency pairs at different times. This is because of the previously-mentioned factors, which can cause the price of a currency pair to rise or fall. AUD/USD has some of the highest trading volumes of all volatile FX pairs because it includes the US dollar.

However, trading in low-volatility pairs requires a different approach and mindset to maximize potential gains. As long as countries continue their march towards recovering from the impact of the pandemic, there will be volatility impacts on currency pairs. As long as there are the most volatile currency pairs in the market, there will be these effects ongoing. A volatility level is affected by major economic data releases, political events, liquidity, or simple supply and demand. This comprehensive understanding empowers traders to make informed decisions, optimize trade setups, and ultimately enhance their overall trading performance in the forex market. Testing currency pairs using a demo account or small trades is crucial for traders, especially newbies.

TRY has been highly volatile since 2016 following a failed coup d’état and the subsequent ‘purges’ that have been taking place in Turkish society. Following the separation, the South allied with America and the North allied with Russia. As a result, the economic disparities of capitalism and communism started to become apparent and can still be seen on the peninsula today. The South Korean won, in its current form, was formed after the separation of the Korean peninsula into two separate parts following the Second World War.