In the world of forex trading, currencies are traded using a three-letter code, similar to ticker symbols in the stock market. While there are over 170 currencies globally, the U.S. dollar (USD) dominates the forex market, making it essential to recognize its code. The second most widely traded currency is the euro (EUR), which is accepted in 19 European Union countries.
Among the major currencies, the following are the most popular in descending order: the Japanese yen (JPY), the British pound (GBP), the Australian dollar (AUD), the Canadian dollar (CAD), the Swiss franc (CHF), and the New Zealand dollar (NZD).
In forex trading, currency pairs are expressed as a combination of the two currencies being exchanged. The most actively traded pairs, known as the majors, account for approximately 75% of forex market activity:
These currency pairs serve as the primary focus for many forex traders due to their high trading volumes and liquidity. Understanding these pairs is essential for navigating the forex market effectively.