Types of currency pairs

As the name suggests, the ‘majors’ are the most popular traded currency pairs. They account for around 85% of the total FX trading volume and are represented by some of the world’s largest economies.

About a quarter of all forex trades are in EUR/USD.

• EUR/USD – the euro vs the US dollar 
• USD/JPY – the US dollar versus the Japanese yen
• GBP/USD – British pound sterling versus the US dollar
• AUD/USD – the Australian dollar versus the US dollar 
• USD/CHF – the US dollar versus the Swiss franc
• USD/CAD – the US dollar versus the Canadian dollar

As they are so regularly traded, you’ll typically find the major pairs to have the tightest spreads (the difference between the sell and the buy prices). This makes them less costly to trade than other forex pairs.

Minor pairs are currency pairs that don’t include the US dollar. They are also known as cross pairs.

Examples include:

• EUR/GBP – the euro versus British pound sterling
• EUR/CHF – the euro versus the Swiss franc
• GBP/AUD – British pound sterling versus the Australian dollar
• GBP/JPY – British pound sterling versus the Japanese yen
• CAD/JPY – the Canadian dollar versus Japanese yen
• CHF/JPY – the Swiss franc versus the Japanese yen
• EUR/NZD – the euro versus the New Zealand dollar

As they are less traded than the major pairs (meaning the market is not as liquid), the spreads are usually wider than the major currency pairs.

Exotic currency pairs consist of a major currency and a much less traded one, such as the US dollar versus the Chinese yuan (USD/CNH).

Many of the smaller currencies are from developing countries or small nations with strong economies. They often come with the largest spreads as they are the least traded type of pair.

Examples include:

• USD/MXN – the US dollar versus the Mexican peso
• USD/THB – the US Dollar versus the Thai Baht
• GBP/PLN – British pound sterling versus the Polish zloty
• GBP/SEK – British pound sterling versus the Swedish krona
• EUR/RON – the euro versus the Romanian leu
• EUR/RUB – the euro versus the Russian ruble

Exotic FX pairs are more suitable for experienced traders. Due to the economic and political instability of some nations, they present a greater risk (and potentially greater rewards) than the other pair types.