Top 10 Most Volatile Forex Currency Pairs

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Volatility refers to the frequency and amplitude of price fluctuations. It is an important indicator of changes in exchange rates, so traders and investors use it to assess risk. If, in a set time, the price changes dramatically and with large spreads, the volatility is high.

The degree of volatility shows the state of the market at different points in time. If there is a significant rise in interest from bulls or bears, volatility rises. Such interest leads to increased risks and more trading opportunities.

In this article, we will discuss the highly volatile currency pairs you may encounter in the forex market. Learn what forex pairs move the most with the FXOpen trading platform.

Volatile Currency Pairs: What You Need to Know

In the foreign exchange market, the high volatility of forex pairs gives a lot of trading opportunities and can lead to greater gains, as well as more significant losses. With higher volatility comes greater risk.

An increase in volatility can be caused by the publication of economic indicators or other news related to the currency. Another reason is the level of liquidity. The rule is the higher the liquidity, the lower the volatility. Liquidity means the volume of supply and demand. Balanced supply and demand make it harder to get the price to move.

Exotic currency pairs are the most volatile because their liquidity is often lower than the major currency pairs, which are the least volatile forex pairs. Historically, these pairs have been the most popular among traders; they have the largest trading volumes and don’t experience sharp price changes.

Which Forex Pairs Move the Most?

According to our list of the most volatile currency pairs, AUD/JPY, NZD/JPY, and GBP/EUR have the largest range of daily, weekly, and monthly changes. Below we discuss the pairs of that list that move the most.

AUD/JPY

The most volatile currency pair in 2023 is AUD/JPY. This pair includes the Australian dollar and Japanese yen and is considered one of the fast-moving forex pairs. However, the desirability and strength of the AUD and the JPY have made the pair particularly attractive.

While the Australian dollar is a commodity currency, which is strongly linked to mineral and metal exports, the Japanese yen is a safe-haven currency associated with stable economic growth. Traders buy JPY during market turbulence but don’t turn to AUD in such periods, which is why the pair’s price fluctuations can be dramatic. Additionally, world events easily influence both currencies, making it hard to predict their future movements.

NZD/JPY

This highly liquid minor forex pair represents the exchange rate of the New Zealand dollar against the Japanese yen. As one of the world’s major reserve currencies and a stable currency with large trading volumes, the Japanese yen moves slowly.

In contrast, New Zealand heavily depends on commodity exports, and its currency is also affected by the prices of agricultural products like milk, eggs, meat, and timber. As a result, the NZD/JPY market is experiencing large price fluctuations, which makes it one of the most volatile pairs in forex.

GBP/EUR

The GBP/EUR pair is made of the British pound and the euro. Both are among the world’s most traded currencies. 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.

After Brexit, there is constant volatility in this pair. This is especially true when we see any key policy statements made in Britain. Changes in the price of this currency pair depend on the economic condition of the UK and EU economies, their trade relationships, and inflation rates.

CAD/JPY

The CAD/JPY is the pair of the Canadian dollar and the Japanese yen. This currency pair is influenced by trade relations between Canada and Japan, as well as financial reports, balance of payments, and interest rates. Japan exports manufactured goods to its Canadian trading partner, while Canada supplies Japan with natural resources.

This forex pair is also closely associated with the oil market. Japan is one of the largest importers of oil, while Canada is an oil exporter. Although Canada isn’t the main oil exporter for Japan, high oil prices affect the CAD/JPY rate – the amount of yen needed to buy one CAD increases.

GBP/AUD

This pair consists of the British pound and the Australian dollar. As a commodity currency, the Australian dollar is highly correlated with the value of the country’s exports.

The powerful Australian extractive industry struggles because of a slowdown in the Chinese market. Due to the unstable trade relationship between the US and China, there has been a decline in Australian exports to China, and this is a problem for Australian manufacturers and exporters. Trading against the stable pound sterling, the AUD is experiencing volatility.

USD/ZAR

The USD/ZAR currency pair is an exchange rate between the US dollar and the South African rand. The volatility of the pair is heavily influenced by the value of gold because gold is one of South Africa’s main export commodities, and it’s priced in USD on the world market. Thus, the price of gold depends on the strength or weakness of the dollar.

If the price of gold rises, it is likely that the US dollar will also weaken against the ZAR. This is beneficial to South African exporters, and this also leads to a decline in the cost of buying US dollars for the rand.

USD/KRW

This pair includes the US dollar and the South Korean won. The South Korea won appeared after the division of the Korean peninsula into two separate states following World War II.

South Korea is the 6th largest trading partner of the US. Trade balance influences the USD/KRW exchange rate, and if Korea has a trade surplus with the US, the KRW experiences greater demand. Since Korea exports automobiles, electronics, steel, and petroleum, and the demand for these products is unstable, the pair’s rate often fluctuates.

USD/BRL

This is a pair of the US dollar against the Brazilian real. It is known for frequent price movements. Brazil is an emerging market, and it has the potential to grow into a developed South American country. However, the political situation in the country is unstable, and corruption scandals have taken centre stage in the press over the past decade.

In 2019, the election of Jair Bolsonaro, an extreme right-wing populist, as president further exacerbated this situation. Shortly after his inauguration, the Brazilian real experienced a sharp fall against the US dollar. With the current president Lula da Silva, previously convicted of money laundering, Brazil also faces economic challenges, so volatility in the USD/BRL pair is likely to continue.

USD/TRY

The USD/TRY currency pair is the US dollar against the Turkish lira. The lira has been volatile since 2016 due to local social and political events. The political situation in Turkey remains unstable. This instability is evident as the lira has been losing its value since 2019. There remains speculation about the duration of Erdogan’s tenure and the potential impact of a successor, if any, on the value of the lira on global currency markets.

If you want to trade one of the most volatile currency pairs, you can open an FXOpen account and start today.

USD/MXN

The USD/MXN pair shows the exchange rate between the US dollar and the Mexican peso. Mexico exports oil and gas, cars, electrical equipment, copper and gold. As oil accounts for almost 4% of total exports, its price influences the value of the peso.

The MXN takes third place in the list of the most-traded currencies in the Americas, following the USD and the CAD. In 2023, Mexico remains the second-largest trading partner of the US. Traders should keep in mind that the peso’s attractive yields diminish with each rate hike by the Federal Reserve.

How to Trade Forex Volatility

Here are the most common steps traders take to start trading on volatility:

  • Analyse the market. You should do your own market research and conduct fundamental and technical analysis to understand the current trend. Follow the news to stay informed on economic and political events.
  • Choose a currency pair and evaluate risks. The more volatile the pair, the more risk you are exposed to. Make sure that the level of risk you take is comfortable for you.
  • Create an account and deposit funds. To trade with FXOpen, you can use the TickTrader platform and enjoy trading the most popular financial assets, including forex, stocks, metals, indices, and crypto*.
  • Open your first position. Be careful and don’t risk too much in the first stages. Explore our blog to learn more about currency pairs and available markets.

Summing Up

Among the forex most volatile pairs, the number one pair in 2023 is AUD/JPY, followed by NZD/JPY and GBP/EUR. Some pairs experience high volatility due to unstable exports, oil and metal price fluctuations, and local economic events. Others are vulnerable to policy-related issues and market sentiment. Volatile pairs are interesting to watch and could be profitable to trade, but the risk involved is also high. Explore trading opportunities with FXOpen.

*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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