Chapter 8

Getting to Know the Major Currency Pairs

In This Chapter

arrow Looking at the trading fundamentals of the major currency pairs

arrow Calculating the costs of trading

arrow Understanding price movements

arrow Modifying trading strategies to fit the currency pair

A little over half of all daily trading volume takes place in just four currency pairs, known as the majors: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. These currency pairs are the most watched barometers of the overall forex market. When you hear about the dollar rising or falling, it’s usually referring to the dollar against these other currencies.

Even though these four pairs are routinely grouped together as the major currency pairs, each currency pair represents an individual economic and political relationship. In this chapter, I look at the fundamental drivers of each currency pair to see what moves them. I also look at the market’s quoting conventions and what they mean for margin-based trading.

Although it’s important to understand why a currency rate moves, I think it’s also essential to have an understanding of how different pairs’ ...

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