Forex Major Pairs Cheat Sheet
The 7 Major Pairs
| Pair | Nickname | Base / Quote | Key Characteristics |
|---|---|---|---|
| EUR/USD | Fiber | Euro / US Dollar | Most traded pair globally; tightest spreads; driven by ECB vs. Fed policy |
| USD/JPY | Gopher | US Dollar / Japanese Yen | Risk sentiment barometer; yen strengthens during risk-off; BOJ intervention risk |
| GBP/USD | Cable | British Pound / US Dollar | Higher volatility than EUR/USD; sensitive to UK politics and BOE decisions |
| USD/CHF | Swissie | US Dollar / Swiss Franc | Safe-haven flows; negatively correlated with EUR/USD; SNB intervenes frequently |
| AUD/USD | Aussie | Australian Dollar / US Dollar | Commodity-linked; correlates with iron ore, China growth, and risk appetite |
| USD/CAD | Loonie | US Dollar / Canadian Dollar | Oil-correlated; inversely moves with crude prices; close US-Canada trade ties |
| NZD/USD | Kiwi | New Zealand Dollar / US Dollar | Dairy and agriculture exposure; higher yielding; lower liquidity than AUD/USD |
Major Cross Pairs
| Pair | Nickname | Key Driver |
|---|---|---|
| EUR/GBP | Chunnel | UK-Eurozone economic divergence; Brexit-related structural shifts |
| EUR/JPY | Yuppy | Global risk sentiment; popular carry trade pair |
| GBP/JPY | Guppy / Dragon | Highly volatile; amplifies moves of both GBP/USD and USD/JPY |
| EUR/CHF | — | SNB policy; tight range trading since SNB abandoned 1.20 floor in 2015 |
| AUD/JPY | — | Classic risk-on/risk-off barometer; carry trade favorite |
| CAD/JPY | — | Oil prices + risk sentiment combined in one pair |
Pip Values and Position Sizing
| Concept | Value | Example |
|---|---|---|
| Pip (standard lot) | $10 per pip (for USD-denominated pairs) | EUR/USD moves from 1.0850 to 1.0860 = 1 pip = $10 |
| Pip (mini lot) | $1 per pip | 10,000 units instead of 100,000 |
| Pip (micro lot) | $0.10 per pip | 1,000 units — ideal for beginners |
| JPY pairs (exception) | 1 pip = 0.01 (not 0.0001) | USD/JPY from 150.50 to 150.51 = 1 pip |
| Position size formula | Risk $ ÷ (Stop Loss in Pips × Pip Value) | Risking $200 with 50-pip stop on standard lot = 0.4 lots |
Trading Sessions and Peak Hours (EST)
| Session | Hours (EST) | Most Active Pairs | Characteristics |
|---|---|---|---|
| Sydney | 5:00 PM – 2:00 AM | AUD/USD, NZD/USD, AUD/JPY | Lowest volume; widest spreads; can see gaps on Sunday open |
| Tokyo | 7:00 PM – 4:00 AM | USD/JPY, EUR/JPY, AUD/JPY | Moderate volume; JPY pairs most active; BOJ news during this window |
| London | 3:00 AM – 12:00 PM | EUR/USD, GBP/USD, EUR/GBP | Highest volume session; major trend moves often start here |
| New York | 8:00 AM – 5:00 PM | All USD pairs | US economic data releases; London-NY overlap (8–12) is peak liquidity |
| London-NY Overlap | 8:00 AM – 12:00 PM | EUR/USD, GBP/USD, USD/JPY | Tightest spreads, highest volume, most trading opportunities |
Key Economic Drivers by Currency
| Currency | Central Bank | Primary Drivers |
|---|---|---|
| USD | Federal Reserve | Fed funds rate, NFP jobs report, CPI, GDP, Treasury yields |
| EUR | ECB | ECB rate decisions, Eurozone PMI, German data, inflation |
| JPY | BOJ | BOJ yield curve control, risk sentiment, trade balance, intervention |
| GBP | BOE | BOE rate decisions, UK CPI, employment data, political events |
| CHF | SNB | Safe-haven flows, SNB intervention, Swiss CPI |
| AUD | RBA | Iron ore prices, China PMI, RBA rates, employment |
| CAD | BOC | Oil prices (WTI), BOC rates, employment, trade balance |
| NZD | RBNZ | Dairy auction prices, RBNZ rates, China demand |
Key Takeaways
- EUR/USD is the most liquid pair globally; GBP/JPY is the most volatile major cross
- JPY pairs use 2 decimal places (1 pip = 0.01), not 4 like other pairs
- Commodity currencies (AUD, CAD, NZD) are driven by raw materials and China demand
- The London-NY overlap offers the best liquidity and tightest spreads
- Interest rate differentials between central banks are the primary long-term forex driver
Frequently Asked Questions
What is a major pair vs. a cross pair?
A major pair always includes the US dollar on one side (EUR/USD, USD/JPY, etc.). A cross pair is any currency pair that doesn’t include the dollar (EUR/GBP, AUD/JPY, etc.). Majors have the tightest spreads and deepest liquidity because the USD is involved in roughly 88% of all forex transactions.
Why is EUR/USD the most traded pair?
The euro and dollar represent the two largest economies in the world. EUR/USD accounts for roughly 23% of daily forex turnover. It has the tightest bid-ask spreads, the deepest liquidity, and is directly affected by the two most influential central banks — the Fed and ECB. Every global macro fund and multinational corporation trades this pair.
What is a pip and how is it calculated?
A pip (percentage in point) is the smallest standard price move in forex. For most pairs, it’s the fourth decimal place (0.0001). For JPY pairs, it’s the second decimal place (0.01). On a standard lot (100,000 units), one pip equals approximately $10 for USD-denominated pairs. Brokers sometimes quote “pipettes” — fractional pips at the fifth decimal place.
What drives the USD/JPY pair?
USD/JPY is primarily driven by the interest rate differential between the Fed and BOJ, US Treasury yields, and global risk sentiment. The yen typically strengthens during risk-off periods (market crashes, geopolitical crises) because Japanese investors repatriate overseas capital. BOJ intervention — direct selling of yen — has historically occurred when USD/JPY moves rapidly above 150.
What are commodity currencies?
AUD, CAD, and NZD are called commodity currencies because their economies are heavily dependent on commodity exports. The Australian dollar correlates with iron ore and copper. The Canadian dollar moves with crude oil prices. The New Zealand dollar tracks dairy prices. When commodity prices rise, these currencies tend to strengthen against the USD.