Top 15 Most Volatile Forex Pairs

Navigating the highs and lows of forex trading is a challenge all traders face. Add volatile currency pairs to your portfolio, and the risks are even greater—and so are the rewards. If you’re already familiar with other trading options, like futures, and want to branch out into forex, this blog is for you. 

How to make money on Forex? We’ll help you explore the most volatile currency pairs, what makes them tick, and how to navigate them successfully.

Whether you’re a seasoned pro or just starting, Aqua Funded’s funded trading program can help you get the most out of volatile forex pairs. With our help, you can take on daunting currency pairs and turn them into profit.

Benefits of Trading Forex Pairs

Plunge into Liquid Waters

Trading major forex pairs offers liquidity in spades, ensuring a smooth experience. In a bustling market, you'll always find someone ready to trade. This prevents slippage, which is when trades happen at unexpected prices. High liquidity also means tighter spreads, so you pay less when trading. Spreads differ between buying and selling prices; in major pairs, they’re minimal.

Volatility: The Right Kind of Motion

Major forex pairs have just the right amount of volatility. They move enough to make trading strategies work, reacting to central bank decisions, economic reports, and trading sessions. These pairs are perfect for newer traders looking to learn without overwhelming risk. They’re liquid enough to minimize slippage but still volatile enough to offer opportunities.

Always On: Trade Any Time

Forex doesn’t sleep. It operates 24/5, unlike many traditional markets. This continuous trading is possible because forex is traded over the counter globally. While the market is open around the clock, peak activity and liquidity happen during the overlap between the London and New York sessions. You can trade at your convenience, but be aware that activity dips during the Asian session.

Leverage: A Double-Edged Sword

Forex trading offers significant leverage, allowing you to control larger positions with less capital. But it’s crucial to manage risk wisely. Leverage can amplify gains and losses, so a structured plan and sticking to it are vital. The amount of leverage impacts your initial margin, but it shouldn’t lead to reckless trading.

Specialise and Conquer

Focusing on major forex pairs lets traders specialize. You can become an expert in just a few currencies, understanding their movements and influences deeply. This approach can be limiting if you miss opportunities in other pairs, but the in-depth knowledge gained can lead to more successful trades.

5 Ways to Trade Forex Pairs

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2. Master Long-Term Trends with Position Trading

Position trading is a perfect fit if you're looking to profit from long-term trends while ignoring short-term noise. This strategy focuses on fundamental conditions such as interest rate changes or other economic factors. Look for currencies from countries with central banks that either hike or cut interest rates. 

Holding a position longer means you’ll want to target pairs with significant differences in federal interest rates. This can lead to positive carry, where you profit from borrowing at a low rate and investing at a higher one. Pairs with the Japanese yen previously made excellent candidates for this, given Japan’s history of keeping rates low.

3. Ride the Momentum with Trend Trading

Trend trading involves identifying and riding currency pairs with good momentum in one direction. You’ll typically be looking for pairs trading above or below their moving average, like the popular 200-day average. While trends can last for days or weeks, be prepared for minor corrections. 

Trend traders often favor heavily traded pairs for their established trends and deep liquidity. Currencies influenced by commodity prices, such as the Canadian and Australian dollars, also tend to show strong trending behavior.

4. Make Quick Gains with News Trading

News trading lets you capitalize on short-term market movements triggered by major events like central bank decisions or economic data releases. However, this strategy can be risky due to post-announcement volatility, so consider using stop orders to protect your downside and have firm profit targets in mind. 

Major currency pairs with good liquidity can be ideal for news trading. They might be less affected by widening spreads during volatile periods. They also tend to have steady economic reports, helping traders anticipate market reactions.

5. Optimize Speed and Precision with Day Trading

Day trading is all about speed and precision, managing positions over minutes or hours. Charting tools can assist in identifying support and resistance, breakouts, and reversals, helping you determine entry and exit points. 

You’ll want pairs with enough liquidity and intraday price movement for day trading to offer opportunities. Remember that frequent trading increases transaction costs, which can affect your profits.

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Top 15 Most Volatile Forex Pairs

1. USD/ZAR: The Wild Ride of the Rand

The USD/ZAR pair is notorious for its high volatility, averaging close to 13% over the past three years. This stems from the South African rand's sensitivity to political instability, economic uncertainty, and lower market liquidity. These factors create significant price swings and make this pair a favorite for traders seeking volatility.

2. AUD/JPY: Risk-On, Risk-Off Dynamics

The AUD/JPY pair is a classic example of a risk-sensitive currency (Australian dollar) versus a safe-haven currency (Japanese yen). Its volatility is driven by global risk sentiment, with shifts in investor appetite causing substantial price movements.

3. NZD/JPY: Kiwi and Yen in the Mix

Much like AUD/JPY, the NZD/JPY pair is characterized by its volatility due to the risk-sensitive nature of the New Zealand dollar and the safe-haven status of the Japanese yen. Economic data from New Zealand and changes in global risk appetite can lead to significant price shifts.

4. GBP/EUR: Pound vs. Euro Drama

The GBP/EUR pair experiences considerable volatility influenced by economic data releases, monetary policy decisions from the Bank of England and the European Central Bank, and ongoing political developments in the UK and the Eurozone.

5. CAD/JPY: Oil and Safe Haven Play

This pair's volatility is often driven by fluctuations in oil prices, given Canada's status as a major oil exporter, and the Japanese yen's role as a safe-haven currency. Economic indicators from both countries add to the pair's price movements.

6. GBP/AUD: Pound vs. Aussie Showdown

GBP/AUD is known for its volatility, stemming from differences in interest rates, economic performance, and commodity price exposure between the UK and Australia. Traders closely monitor central bank policies and economic data releases for this pair.

7. USD/TRY: Turkish Lira Turbulence

The USD/TRY pair exhibits high volatility, influenced by Turkey's economic policies, inflation rates, and political events. The Turkish lira's susceptibility to rapid depreciation contributes to significant price swings.

8. USD/KRW: Korean Peninsula Tensions

USD/KRW is volatile due to geopolitical tensions in the Korean Peninsula, economic data from South Korea, and global trade dynamics. The pair is sensitive to shifts in investor sentiment and risk appetite.

9. USD/BRL: Brazilian Real Rollercoaster

This pair's volatility is driven by Brazil's economic performance, political developments, and commodity price fluctuations, particularly in the agriculture and mining. The Brazilian real's sensitivity to emerging market trends contributes to the pair's price movements.

10. USD/MXN: Peso Pressure Points

USD/MXN is influenced by factors such as US-Mexico trade relations, economic data releases, and political events. The Mexican peso's exposure to oil prices and emerging market dynamics contributes to the pair's volatility.

11. AUD/USD: Aussie Dollar Dynamics

This pair is known for its volatility. It is affected by commodity prices, particularly iron ore and coal, interest rate differentials, and economic data from both countries. Global risk sentiment also plays a role in its price movements.

12. NZD/USD: Kiwi on the Move

NZD/USD's volatility is driven by New Zealand's economic indicators, commodity prices, and interest rate expectations. The pair is also sensitive to global risk appetite and market sentiment.

13. EUR/JPY: Euro vs. Yen Volatility

EUR/JPY exhibits volatility influenced by economic data and monetary policy decisions from the Eurozone and Japan. The pair is also affected by shifts in global risk sentiment, given the yen's safe-haven status.

14. EUR/USD: Euro vs. Dollar Drama

As the most traded currency pair, EUR/USD experiences significant volatility due to economic indicators, interest rate differentials, and geopolitical events affecting the Eurozone and the United States.

15. GBP/USD: Pound vs. Dollar Dynamics

GBP/USD is known for its volatility, driven by economic data releases, central bank policies, and political developments in the UK and the US. This pair's sensitivity to news events can cause rapid price changes.

How to Choose Forex Pairs to Trade

Volatility: The Pulse of the Forex Market

Volatility is like the pulse of the forex market, guiding traders to opportunities. It is crucial to identify which currencies are moving now and will likely move in the future. Tools like Average True Range (ATR), Standard Deviation, and Bollinger Bands help measure current volatility, aiding decision-making. Knowing which pairs have the highest volatility can lead to successful trades, as these pairs tend to have larger price movements.

Backtesting: Uncovering Your Optimal Currency Pairs

Each currency pair has unique characteristics, often influenced by specific factors. For instance, the movements of USD/CAD are linked to global oil prices. Your trading strategy’s performance will vary across different pairs, so it is important to know under what conditions it works best. Backtesting allows you to test your system in a risk-free way. For example, if you have a strategy that goes long on EUR/USD when oversold on the RSI, you can test this on historical data to see how it performs. This process helps determine which pairs your strategy is best suited for.

Trading Sessions: Timing Your Forex Trades

The forex market is open 24/5, with activity in specific pairs varying based on major world economies. There are four main trading sessions: Sydney, Tokyo, London, and New York. Each session has its characteristics, with overlaps between some sessions leading to higher volatility. For example, USD/JPY tends to be more volatile during the New York and Tokyo sessions. Knowing this information can help guide your trading decisions, including which pairs to focus on and when to trade them.

Fundamental Events: Navigating News and Volatility

Fundamental news events like Non-Farm Payrolls (NFP), CPI releases, and interest rate decisions can significantly impact the forex market. These events often lead to increased volatility, creating trading opportunities. For instance, if NFP is expected later today, you should trade pairs like EUR/USD, GBP/USD, and USD/JPY. Whether you choose to trade news releases or not, the increased volatility can’t be ignored when deciding which pairs to trade.

Spread and Costs: Managing Your Trading Expenses

Trading costs vary from broker to broker and are influenced by market conditions. When more trades are placed on a currency pair, the market is more liquid, resulting in lower trading costs. When selecting a pair to trade, consider how swap fees might affect your trade, especially on Wednesdays when they are usually paid or deducted at triple the usual value. Being mindful of these costs can help you maximize your profits.

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AquaFunded has helped over 42,000 traders collect more than $2.9 million in rewards, backed by a 48-hour payment guarantee. Whether you choose instant funding options or want to prove your skills through customizable challenge paths, AquaFunded has you covered.

Trade the Most Volatile Forex Pairs for Big Profits

Futures options are all about volatility, and AquaFunded lets you trade the most volatile forex pairs for maximum profit potential. Pairs like the GBP/JPY, NZD/USD, and AUD/JPY experience big price swings, creating profitable trading opportunities. AquaFunded allows you to trade any pair you want with no restrictions. The more volatile the pair, the more profit potential you have. AquaFunded’s flexible trading conditions allow you to capitalize on volatility without risking your funds.

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One of the most significant advantages of trading futures options with AquaFunded is the potential to keep 100% of your profits. While most prop firms take a cut of your earnings, AquaFunded lets you keep everything you make. This is a game-changer for traders looking to maximize their profits. Consider trading futures options with someone else’s money and keeping all the rewards. With AquaFunded, it’s possible.

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