Cracking the Enigma of Forex Currency Pairs

Cracking the Enigma of Forex Currency Pairs

There are many factors that influence the foreign exchange market. Forex is the largest and most liquid market in the world. There is a great deal of opportunity to realise a profit, but to get anywhere in forex you need to understand currency pairs. In this blog we will explore what currency pairs are and what currency pairs do, so you can better understand their role in forex trading. 


A currency pair is the quotation between two currencies. The first listed currency is called the base currency, while the second listed currency is called the quote currency. The value of the base currency is quoted against the second listed currency, the quote currency. By comparing the value of currencies we can discern how much of the quote currency is required to purchase one unit of the base currency. The trading of currency pairs takes place exclusively on the foreign exchange or “forex” market. So that’s currency pairs.

Factors such as local interest rates, political instability, natural disasters and the level of foreign direct investment can strongly influence the trading value on any given currency pair. For example, if the price of crude oil drops in Australia, an economy heavily dependent on oil exports, then the price of the Australian Dollar will falter against the US Dollar, which will be reflected in AUD/USD. 

Major currency pairs represent the most popular currency combinations. There are several major currency pairs – namely EUR/USD, USD/JPY, GBP/USD and USD/CHF – as well as the top three ‘commodity currencies’ against the US dollar, which are AUD/USD, USD/CAD and NZD/USD. Here at Halcyon we apply our intelligent trading algorithm to two traditional majors EUR/USD and USD/JPY and one top ‘commodity currency’ NZ/USD. To understand why let’s delve into the finer attributes of each of these pairs in forex trading.



EUR/USD is the most popular currency pair in the world. Hearing this may incline you to play devil’s advocate and look for something else however, EUR/USD tends to be less volatile than other currency pairs. This is because both the US dollar and the euro are backed by the world’s two largest economies as well as some of the world’s most established banks. Greater stability allows for some level of control over your investment but it is important to stress that the EUR/USD can still be highly volatile like the rest of the forex market. Recently, the advent of Brexit & Covid-19 has thrown greater uncertainty into the market.

The yen’s low value relative to the US dollar is what will first catch your eye with the USD/JPY pairing. However, the yen is recognised as a ‘safe haven’, which means the yen will rise in periods of economic uncertainty. This also means the value of the USD/JPY pair is correlated with the USD/CHF pair – because Swiss franc is also a safe haven investment.


Known as the ‘Kiwi’ this is the New Zealand dollar against the American dollar. New Zealand’s economy is backed by agriculture, international trade and tourism, so when one or more of those is affected you can expect to see volatility. As with all currencies, the role of the banks should also be considered. The Reserve Bank of New Zealand sets interest rates that can have a major consequence on NZD/USD. It is important to keep informed about what the Reserve Bank of New Zealand and the Federal Bank of America are doing at all times when dealing with this pair. 

Due to the unscalable amount of data to consider before trading across these three pairs, it is impossible to effectively analyse the forex market to arrive at precision. This is why AI technology can provide greater success across forex trades. AI never sleeps. AI provides an unemotional analysis of market behaviour. Our AI learning technology analyses over 37,000 different data points in milliseconds. With a target return of 24% p.a. (after fees) our expert supervised AI algorithm sets the bar high in forex trading.

Ready to start? Here at Halcyon we would like to start you on the path of intelligent wealth creation. Contact us to make a smart trading move today.