currencies popular currency pairs and CFDs with Enhanced Execution and no restrictions on stop and limit orders. So, when you “BUY” the currency pair, you are ideally selling the quote currency, which is the Japanese Yen and buying the base currency – which is the Canadian Dollar. Conversely, a “SELL” order for this currency pair would imply selling the base currency – that is, the Canadian Dollars – and effectively buying the quote currency – which is the Japanese Yen. Since the beginning of the ongoing Russia-Ukraine war, global oil prices have been posting turbulent price performances.

highly volatile

Should you trade exotic currency pairs? – FXCM

Should you trade exotic currency pairs?.

Posted: Thu, 06 Oct 2022 07:00:00 GMT [source]

Traders should note that there are distinct differences that exist between volatility and risk. Whereas volatility is out of the trader’s control, risk, however, is not. Risk depends on the trader’s tolerance and willingness to be exposed to risk, as well as how much risk they want to be exposed to.

As a result, since the commencement of the trade war, currency pairs containing AUD have seen greater volatility. To make matters worse for the GBPAUD pair, after the Brexit referendum outcome in 2016, the pound has seen greater volatility. The American and Australian dollars respectively are the elements of the AUDUSD volatile currency pair. As the chart shows the GBP/JPY is most volatile currency pair traded on NADEX.EUR/GBP is the least volatile.

USDNOK: 5.25% Historical Volatility

Of course, there are a lot of other pairs, mainly exotic ones, but nobody knows which of them is the least liquid. You can find the information on other currency pairs in the chart above. So, the most liquid currency pair is EUR/USD, which accounts for 28% of the total transaction volume in the Forex market.


The most common of them are day trading, scalping, price action, swing trading, etc. Each of these strategies can be implemented, given the market is volatile. Minor currency pairs areones that leave out the United States dollar, and they are normally less liquid. • The forex market uses symbols to designate specific currency pairs.

Identifying Stable Currencies and Volatile Currencies

Everybody knows that shop prices are not static and they can rise or fall at any time. Forex trading may be a risky business, South Africa included, and while Forex trading is not a successful path for everyone, anyone can reach success in it. South Africa is a great example when it comes to the popularity of Forex trading. Volatility is an important consideration in everything from forecasting weather patterns to projecting the future price action of trades.

  • The forex market is prone to drastic changes in market prices, hence high volatility.
  • To determine the FX pair’s volatility, investors can also use the Bollinger Bandwidth .
  • For instance, the pair EUR/USD is quoted at 1.11 and so you will need $1.11 to buy €1.
  • In this context, there will be a high degree of uncertainty surrounding the 2017 outlook as the US Administration takes office.

Because the factors aren’t likely to change, most currencies that are experiencing volatility now may continue to do so in 2022. The inverse relationship between the Australian dollar and the Japanese yen makes this pair highly volatile. The Australian dollar is a commodity currency, which means its value is highly influenced by the price and volume of Australia’s exports, especially minerals, metals, and agricultural products. According to Goldman Sachs and the Australian government’s commodity forecaster, the price of iron ore would stay relatively stable for the rest of 2022.

The fact is that various methods of technical analysis might not work in such situations. If you decide to trade, say, USD/SEK or GBP/NZD, your analysis may not work as effectively as, for example, when trading EUR/USD. The Most Volatile Currency Pairs TableThe table shows that today the most volatile Forex pairs are exotic, namely, USD/SEK, USD/TRY, and USD/BRL. There are times when the currency price stands still or moves within a very narrow range. As an emerging market, Brazil is an exciting economy for those seeking to capitalise on the forecasted future development of the South American country.

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To calculate historical volatility yourself, you can use online tools like a forex volatility calculator to determine the historical volatility of a currency pair over a given number of weeks in the past. A sample output from that tool for EURUSD volatility over 52 weeks appears below. It shows how volatility in that pair varied over the time frame analyzed, as well as by hour and trading day. This sort of analysis can be useful if you wish to determine when a currency pair is typically most volatile and to what extent. Currency option prices are often notably affected by the market’s anticipation of shifts in the underlying currency pair’s volatility.

When looking to develop a strategy you need to think about a few things. And number 10 for the most volatile Forex pairs goes to USD versus the MXN. As you know, since Trump became the president, there was kind of a rocky relationship between the States and Mexico which made USDMXN to be a very volatile currency pair.

We have a wide range of educational resources, across all financial markets, including currency, indices, stocks, and cryptocurrencies. We also help competent traders reach their full potential with ourfunding solutions. Trading high-volatility currency pairs necessitate determining the appropriate position size. Slippage is more likely to occur when trading high-volatility currency pairings than low-volatility currency pairs.

The value of a currency will be determined by the financial health of the country, for example, The dollar Yen will be determined by The United States and Japan. As a result, the price movements of this pair can be very dramatic depending on the current global economic outlook. Trade Forex volatility pairs with top rated broker eToro, which has been selected based on its high rating and your location. The value of a currency pair is determined by how many units of the quote currency are equal to 1 unit of the base currency.

As a of the United States’ trade war with China, Australian imports to Chinese markets have decreased. Because China is one of Australia’s most important trading partners, this is bad news for Australian manufacturers and exporters who rely on strong economic ties with China to boost revenues. Because the pair is so vulnerable to fluctuations in market sentiment, the currency pair sees a lot of volatility. The volatility of a currency pair is a measure of how frequently the price of this pair changes. A pair that changes price rapidly has high volatility while a currency pair that does not fluctuate aggressively is not.


Keeping track of an economic calendar will give you an edge over others to find out about data releases beforehand. Another factor that determines volatility in the Forex market is global news and events. Trading wars, regional disputes, inflation, and interest rates can all lead to changes in the economy, which influences the value of the local currency. The high availability of a currency leads to stabilized prices and low volatility. However, when the asset is less liquid, and limited in the market, it becomes more volatile because its value fluctuates after any small change in the economy. Entering and leaving the market at the Forex market trading hours is a good idea when trading volatile assets.

So AUDJPY means AUD versus the JPY and the JPY is considered to be one of the least volatile currency pairs. You may conclude on the basis of such statements that trading in exotic currency pairs or cross rates promises large profits. Indeed, the range of exotic pairs’ movements is much broader than that of the major ones. Major market events or economic events in a country can affect its currency and all the currency pairs linked to it.

  • Important socioeconomic events can significantly affect a currency’s volatility, such as trade wars and Brexit.
  • But because they have a bird called Kiwi and it’s kind of a national mark for New Zealand.
  • There are times when the currency value stops or moves inside an exceptionally limited reach.
  • It’s also critical to understand the key differences between the most volatile currencies and those with low volatility values.

This is done by measuring it from the mean or average of that specific data. With the price of gold rising, the price of the dollar is also set to increase against that of ZAR. ZAR looks to benefit greatly should investors be willing to take on more risks in developing countries such as South Africa. The main exports in New Zealand include dairy, eggs, meat, wood, honey, and others, and as a result, the slightest change in these exports will drastically affect the value of NZD against JPY.

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Wide Bid/Ask spreads can handicap your entry and exit of a position, but as long as you have a tested trading strategy, adhering to sound risk management principles, then fear should not be an issue. The major currency pairs include the most actively traded currency pairs in the forex market such as EUR/USD, GBP/USD, USD/JPY and USD/CHF. The US Dollar, Swiss Franc and Japanese Yen are considered to be the safe-haven currencies. Volatility is something that all traders will have to face over the course of their trading careers. While there are certain currency pairs that are less volatile to trade, all currency pairs can fall victim to wide price swings in a short period of time.

The value of this currency pair is, therefore, highly correlated to oil prices. It is also affected by the performance of the global economy, seeing that the Japanese Yen is considered a safe haven in times of political and economic turmoil. By most volatile forex pairs, we refer to tradable currencies with the most erratic price action. And we would like to start by observing that these often fall within the minor and exotic categories of FX pairs.

To determine which currency pairs are the most suitable ones, a trader must first have a look at their trading strategy. A trader utilising a range trading strategy will want to avoid exotic currency pairs, but rather look at major currency pairs and certain minor pairs such as EUR/CHF and EUR/GBP. With so much volatility in the market, it can be tough to predict exactly which currency pairs will be the most volatile in 2022. However, we have compiled a list of the most volatile currency pairs, along with some of the least volatile and the most liquid based on trends and forecasts from the forex markets. A definitive list of the most volatile currency pairs is hard to collate, chiefly because volatility can affect different currency pairs at different times. This is because of the previously-mentioned factors, which can cause the price of a currency pair to rise or fall.

base currency started to sell the GBP into the market, and when the supply increased the price of the British pound decreased against other major currencies. Europe is highly regarded in the global political, economic, and technological sectors, which makes the Euro relatively unstable. However, Australia seems to be stable politically, as the country is strategically and geographically far from the center of the world.

You will also need to check China’s economic growth and the price of commodities., You also need to carefully analyze the impact of political/economic tensions between China, the US, and Australia. The GBP/AUD currency pairs two of the world’s largest economies – Britain and Australia. They are some of the most traded currencies but also one of the most volatile fx pairs to trade today. And unlike most other fx pairs on this list, the two are closely related because they are part of the Commonwealth. Moving on, three of the most volatile currency pairs in the forex market will be listed below. The next most volatile currency pairs are the EURGBP and the CADJPY.