The $6.6 trillion-a-day forex market is one of the most lucrative and volatile entities of its type in the world, and one that’s home to approximately 170 different international currencies.
However, it’s the seven so-called “major” currencies that account for around 68% of all daily trades, while the US dollar is on one side of 88% of all forex transactions.
Of course, choosing the right currency pairs to trade is crucial from a strategic perspective, especially as some 70% of FX traders regularly lose money. In this post, we’re going to appraise the best currencies to trade in 2024, while also taking a look at their most lucrative pairs.
Table of Contents
#1. The US Dollar (USD)
As the dominant reserve currency in the world (and one that’s backed by the most powerful global economy), it’s little wonder that the USD is the single most traded currency.
It’s also among the most resilient and liquid assets of its type, meaning that it’s incredibly easy to buy, sell and convert into cash in real-time.
The USD/EUR is also the single most traded currency pair (accounting for around 24% of all daily trades), thanks largely to its combined liquidity. The USD/JPY is another popular option during times of economic contraction or recession, as both assets are considered to offer a haven to investors.
#2. The EURO (EUR)
Next up is the EURO, which is backed by a similarly large and diverse economy and incredibly liquid despite the economic tumult that regularly grips the Eurozone.
Because of this, the EUR/USD is another widely traded asset, especially during the European and North American trading sessions.
Due to the proximity and trade relations that bind the EU and the UK, the EUR/GBP pairing is another that boasts liquidity and predictability in equal measure. However, this pairing has become slightly more volatile in the wake of Brexit, although investors can leverage this and short-term price shifts through various FX strategies.
#3. The Japanese Yen (JPY)
As we’ve already touched on, the JPY is a haven currency, largely due to its relatively affordable nature when compared with assets from similarly developed economies like the Eurozone and the UK.
At the same time, the yen shows significant value as a hedge against a US or global recession, with this borne out by the asset’s performance in the wake of the 2008 financial crisis.
The most popular yen pairs are the JPY/USD (particularly for risk-averse investors) and the JPY/GBP, while this currency regularly dominates activity during the Asian trading session.
#4. Pound Sterling (GBP)
The GBP has endured a challenging few years, in the wake of Brexit, decreased trade flows, and the gradual devaluation of the pound.
Typically, this has caused the GBP to trade in ever-depreciating ranges against the dollar and the EURO, although it has made recent ground against the dollar following a better-than-expected economic performance that has boosted the popular GBP/USD pairing.
Other popular GBP pairings include the GBP/EUR, with this remaining in high demand among traders despite the conflict and trade disruptions that have occurred between the UK and the Eurozone since 2016.
#5. The Australian Dollar (AUD)
We’ll close with the Australian dollar (AUD), which has recently seen a significant uptick while the AUD/USD has risen (thanks in part to an increasingly weak and soft dollar).
Unlike the currencies listed above, the AUD correlates closely with the commodities market and primarily assets such as coal and iron ore.
Because of this and the countries’ close trade relationships with China, the AUD/CNY is often sought out by investors, while the AUD/JPY and AUD/CAD are also widely traded in the current marketplace.
