Most Volatile Forex Currency Pairs to Trade

most volatile currency pairs

Currency pairs of combinations that are widely used and in circulation are more stable and less volatile. In this article, we’ll take a look at the most volatile and least volatile currency pairs and how they both can be traded effectively. In forex trading, volatility refers to the frequency and magnitude of changes in a currency’s value. Depending on how much its value deviates from the average, volatility is a measure of standard deviation.

While it’s a good idea to avoid trading during high volatility in order to minimize risk, trading during volatility can also bring back windfall returns. Ultimately, whether or not to trade highly volatile pairs is up to each trader and should be decided upon after a close examination most volatile currency pairs of risk and skill. With low volatility pairs, breakouts might indicate a continuation of a trend, however, with high volatility pairs, this doesn’t always hold true. Major market events or economic events in a country can affect its currency and all the currency pairs linked to it.

Its value is influenced by the fluctuation in the price of its exports, like oil and agricultural products. The difference in the economic drivers of the two currencies in a pair can also affect the pair’s volatility. For instance, when the currency of a commodity-based economy is paired with the currency of a service-dependent economy, the pair can be volatile due to the difference. As a result of the United States’ trade war with China, Australian imports to Chinese markets have decreased.

most volatile currency pairs

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Accepts no responsibility for any use that may be made of these comments and for any consequences that result. The price of gold affects the volatility in the US Dollar against the South African Rand. Gold is a significant export of South Africa, and the commodity’s price on the world market is in US dollars, meaning the cost of gold depends on the value of the US Dollar.

The Most Volatile Currency Pairs

Such interest leads to increased risks and more trading opportunities. Volatility is also possible in the wake of big economic announcements when a sudden jolt in the market is possible. Big announcements have the power to sway and move prices and sometimes even the bigger, more in-demand currencies are heavily influenced by these news events. The higher the liquidity of a currency pair, the lower the volatility of that pair will be. The higher the supply and demand of a currency pair are, the harder it will be to move the overall price of the pair, thus keeping volatility low. All in all, checking up with the times of increased

volatility in Forex, traders who work intraday choose the best time and


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More volatility means more trading risk, but it also means more trading opportunities because price movements are larger. The most liquid currency pairs are EUR/USD, USD/JPY, GBP/USD, AUD/USD, and USD/CAD. The high liquidity of these pairs means that they have the tightest spreads and virtually no slippage due to their large trading volumes. Therefore, these trading assets are best suited for scalping strategies.

Here Are the Most Volatile Forex Currency Pairs

You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. FX markets are vulnerable to a range of factors that cause price fluctuations, and many investors modify their strategies to take advantage while also ensuring FX currency protection. For example, the GBP has been highly volatile in recent years due to uncertainty surrounding Brexit and its economic implications. On the other hand, the USD has seen much less volatility due to policy improvements in the United States. At the top of the page, choose the number of weeks over which you wish to calculate pairs volatility.

  • For example, you write the Canadian Dollar as CAD, and the Japanese Yen is JPY.
  • This instability was reflected in the fact that the lira fell following heavy losses to President Recep Tayyip Erdoğan’s AK Party in elections held throughout 2019.
  • However, for

    successful intraday trading you need most

    volatile currency pairs, which will make your

    trading most efficient.

  • GBP/USD belongs to the primary category of assets, which are currency pairs with the highest daily trading volumes.

If the vote comes and goes, and the currency pair doesn’t move higher, the trader can keep the short GBP/USD trade and make profits as it falls lower still. The cost of protecting the short-term trade equals the premium paid for the call options option, which is lost if the GBP/USD stays above its strike price throughout and expires before the vote. When one country’s currency is weaker than another country’s currency, it can buy less of the other country’s currency. It could be challenging for an investor to keep up with exchange rate movements, but this metric changes how much investment in international markets will return. Every country has its currency, with its exchange rates for foreign currencies. When one country’s currency is more robust than another country’s currency, it can buy more of the other country’s currency.


For example, a security with sequential closing prices of 5, 20, 13, 7, and 17, is much more volatile than a similar security with sequential closing prices of 7, 9, 6, 8, and 10. Securities with higher volatility are deemed riskier, as the price movement–whether up or down–is expected to be larger when compared to similar, but less volatile, securities. The volatility of a pair is measured by calculating the standard deviation of its returns. The standard deviation is a measure of how widely values are dispersed from the average value (the mean). The forex market is prone to drastic changes in market prices, hence high volatility. This is because some factors like political, economic, and social events cause volatility in the prices.

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Conversely, if there are a low supply and low demand, the price of a currency pair can move more dramatically and therefore higher volatility is possible. This behavior is seen more frequently in less used currency pairs. These pairs are therefore more volatile because their supply and demand are generally lower than the bigger, more commonly traded currency pairs.

What affects the volatility of currency pairs?

This is beneficial to South African exporters, and this also leads to a decline in the cost of buying US dollars for the rand. On the one hand, there is sterling, a reserve currency, which also represents the largest financial centre. On the other hand – the euro, which is a  strong and stable currency and legal tender across multiple European countries. Like AUD/JPY, the New Zealand Dollar against the Japanese Yen can also be volatile. The NZD is backed by a commodity-based economy that entails agricultural produce export.

The Australian dollar is a commodity currency, which means its value is highly influenced by the price and volume of Australia’s exports, especially minerals, metals, and agricultural products. According to Goldman Sachs and the Australian government’s commodity forecaster, the price of iron ore would stay relatively stable for the rest of 2022. The major currency pairs include the most actively traded currency pairs in the forex market such as EUR/USD, GBP/USD, USD/JPY, and USD/CHF. The US Dollar, Swiss Franc, and Japanese Yen are considered to be safe-haven currencies. Hedging forex is a strategy to protect one’s position in a currency pair by taking a second position in the opposite direction.

What is Volatility in Currency Pairs?

72% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. South African Rand is considered a commodity currency due to South Africa being a major commodity exporter. ZAR has traditionally seen higher volatility due to political factors and fluctuations in the commodities markets. The currency tends to perform better when markets are in “risk-on” mode.

most volatile currency pairs

Gold is a common hedge against inflation, meaning shifts in inflation rates or monetary policy, particularly in the US, can result in large movements in this currency pair. Two of the most popular ways to trade forex volatility – or volatility in general – is by opening a CFD account. CFDs are financial derivatives, meaning that they afford you the ability to go long to bet on the market rising, as well as short to speculate on it falling. The US Dollar and Swiss Franc tend to strengthen when investors are risk-averse, but they may not deviate much from each other. This helps keep the volatility of this currency pair to a minimum.

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However, with a well-thought-out trading plan and risk management strategy in place, there is little to fear from volatile currency pairs. The least volatile currency pairs tend to be the major currency pairs which are also the most liquid. This attracts more trading volume and facilitates greater price stability in turn.

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