Most Volatility Forex Pairs: Strategies to Capitalize on Big Moves
In the currency market, there are more than 180 currency pairs to trade. However, when it comes to volatile pairs, there are few options, and finding them requires proper research. But worry not; in this blog, we will discuss the top 10 most volatile forex pairs to help you out. So stay tuned.
An Introduction to Forex Volatility
Volatility is a degree or rate of rise and fall of the asset price over a period. The higher the price fluctuation, the higher the volatility, and the lower the price fluctuation, the lower the volatility.
Forex volatility deals with the price fluctuation rate of a currency pair over a period. The foreign exchange market is among the most volatile markets, and you can identify significant price movement in a short time.
Volatility is a vital element in the forex market that impacts your buying and selling decisions. The concept of whole trading is based on volatility; no volatility means no trading. That’s why many traders look for volatile forex pairs to trade in.
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The most volatile forex pairs include GBP/JPY, USD/TRY, GBP/NZD, and EUR/AUD due to their liquidity and economic factors. Exotic pairs like USD/ZAR can also be highly volatile.
The most profitable pair depends on strategy and risk tolerance, but EUR/USD, GBP/USD, and XAU/USD (Gold/USD) are popular due to high liquidity and price movements.
Silver (XAG/USD), GBP/JPY, and Oil (WTI/UKOIL) have high volatility similar to gold. Crypto pairs like BTC/USD can also show extreme price swings.
XAU/USD is most volatile during the New York session (13:00–17:00 UTC), especially during the London-New York overlap (12:00–16:00 UTC) when liquidity is highest.
AUDJPY, NZDJPY, GBP/AUD, and CAD/JPY are amongst the most volatile minor pairs.
USD/ZAR, USD/KRW, USD/TRY, and USD/MXN are the most volatile exotic forex pairs.
10 Most Volatile Currency Pairs Forex 2024
In the forex market, the currency pairs are mainly divided into three categories: Majors, Minors, and Exotics. Beginners generally trade in majors, while advanced and adventurous traders also go for the other options.
The volatility of pairs changes with the category of pairs. Exotic pairs are the most volatile, followed by minors and majors. For a better understanding, we will see a list of the most volatile forex pairs in 2024 based on the three categories:
Most Volatile Major Pairs
AUD/USD
AUD/USD is among the most volatile forex pairs to trade in the London session. The Australian Dollar has a strong correlation with the commodity market. In addition, the country’s economy relies heavily on gold production.
Basically, changes in the commodities market like gold, coal, iron, and many others have a direct impact on AUD value. The currency correlations make the Australian dollar a highly volatile currency.
So, AUD/USD can be the right pair for traders who are knowledgeable about the commodities market. Daily, traders can identify many opportunities to trade the pair and make good money.
CAD/USD
With high volatility, CAD USD is amongst the most liquid forex pairs. Canada’s economy depends highly on commodities like petroleum, gran, minerals, wood, and others.
The high influence of Canada on the commodity market makes the Canadian Dollar a volatile currency. When it comes to USD, it is the strongest currency, and the majority of traders trade in USD.
So, CAD/USD becomes a popular choice for traders to trade during New York sessions. Traders keep their watch on Bank of Canada Announcement, US Non-Farm Payroll data, and other data to identify potential opportunities for trading this pair.
Most Volatile Minor Pairs
AUDJPY
As we have studied above, the Australian Dollar is highly volatile due to its correlation with the commodity market. So, the traders looking for an alternative of USD can go for Japanese Yen.
Both the countries, Australia and Japan, are highly developed and rely heavily on the export market. On the one hand, Australia greatly influences the commodity market; on the other hand, Japan is leading the world in the technology sector.
The distinct market conditions and nature of currency make the AUD/JPY an ideal trading option. Especially if you want to trade in Asian sessions, you can surely go for this pair.
NZDJPY
AUD/JPY and NZD/JPY are popular correlating forex pairs. So obviously, with AUDJPY, NZD JPY also got a place on our list of most volatile forex pairs.
The New Zealand Dollar is a high-yielding currency, while the Japanese Yen is a low-yielding currency. The pair saw a significant rise and fall throughout history during events like World War, the collapse of Bretton Wood, Plaza Accord, and many others.
Trading NZD/JPY can be difficult for traders due to less liquidity and high volume. However, regarding volatility, the pair is more volatile than the major pairs. A trader can trade in these pairs in Asian sessions, where the markets of both countries are open.
GBP/AUD
The Great Britainian pound is the fourth most traded currency, while the Australian dollar is the fifth most traded currency. Both countries have a major influence on the worldly financial market, making the pair GBP/AUD a good option to trade.
You can spot a significant movement in GBP/AUD pairs when trading in forex. Also, it is amongst the lowest spread forex pairs, especially when dealing with minors. The best time to trade GBP/AUD is during the hours of overlap between European and Asian Sessions.
CAD/JPY
The Canadian dollar is amongst the most volatile forex currencies with a long history of significant movement. Canada is the top supplier of most of the commodities like oil, wood, natural gas, and many others.
As a result, the Canadian economy has a strong correlation with the commodity market. An increase in the price of these commodities positively impacts CAD, while a decrease has a negative impact.
Meanwhile, the Japanese yen is quite a stable currency with a low interest rate that depends hugely on the technological market. So, if you don’t want to trade CAD against USD, you can replace USD with Japanese Yen.
Most Volatile Exotic Pairs
USD/ZAR
Exotic currencies are generally of underdeveloped and developing countries. You can see a significant difference in the price fluctuation rate of exotic compared to the major and minor pairs.
USD/ZAR is amongst the most volatile exotic pairs that contain the South African rand and the US dollar. South Africa is an emerging economy, while the USA is the strongest.
Being a currency of emerging nations, ZAR has seen a significant drop throughout history. Due to the huge drop in ZAR value, traders generally open a long position in USD/ZAR and make money from the fall. In addition, ZAR has a strong correlation with gold trading, which can give birth to significant volatility in the market.
USD/KRW
KRW, which stands for South Korean Won, is another exotic currency option to trade. The pair’s exchange rate at the time of writing the article was around 1380. This means that to buy one US dollar, you require 1380 KRW. The huge difference is that the currency value sheds light on the risk, uncertainty, and high volatility associated with USD/KRW trading.
South Korea is also a major trade partner of the USA. So, changes in the import and export dynamics between the countries also affect the USD/KRW pair. As a result, the South Korean Won frequently fluctuates against the USD.
USD/TRY
The Turkish Lira saw amazingly high volatility and instability over the last decade. The political instability in Turkey is the major reason for the price fluctuation of the TRY against the USD.
Trading USD/TRY is quite uncertain, as it has low liquidity and a high spread. However, even after that, many traders trade USD/TRY to make huge profits from highly risky trading. The announcement of the Central Bank of the Republic of Turkey and the US’s Fed policy resulted in significant trading opportunities for the pair.
USD/MXN
Regarding exotic pairs, USD/MXN is amongst the most traded pairs. The Mexican Peso was quite a stable currency in the early crisis. However, the oil crisis significantly downgraded its value and is still struggling, creating volatility in the market.
USD/MXN is a highly liquid pair, unlike the other volatile exotic currencies. In addition, the interest rate is quite low for trading this pair; the strong correlation of the Mexican peso with oil prices creates significant opportunities in the market.
Wrapping Up
Volatility is an important factor in the forex market. However, it is like a double-edged sword: the more volatility, the more risk and uncertainty in trading the currency pair. Also, predicting the price movement of such a pair is quite challenging, and even a small event can make a big change in asset price.
Undoubtedly, the profit amount is higher with the most volatile forex pairs. However, if your prediction goes wrong, the loss will also be higher. Trading highly volatile pairs requires exceptional knowledge, emotional control, money, and risk management skills.
Our comprehensive and insightful market alerts will help you trade volatile pairs efficiently with proper risk management. If you are an adventurous trader who loves to trade volatility, then you can give our exclusive signals a try.