Understanding Major Forex Currency Pairs
Deep dive into major, minor, and exotic forex pairs — what drives each pair, key correlations, the best trading times, and how to use Diplyzer to analyze any currency pair.
Deep dive into major, minor, and exotic forex pairs — what drives each pair, key correlations, the best trading times, and how to use Diplyzer to analyze any currency pair.
Every forex trade involves two currencies — and understanding the specific characteristics of each pair is the foundation of successful currency trading. Not all pairs move the same way, trade at the same times, or respond to the same catalysts.
Characteristics: Tightest spreads, deepest liquidity, smoothest price action of all major pairs. Represents over 20% of total daily forex volume.
Key drivers: ECB vs. Federal Reserve monetary policy divergence, Eurozone economic data (GDP, CPI, PMI), and risk sentiment.
Best trading windows: London Open (08:00-12:00 UTC) and the London/NY overlap (12:00-17:00 UTC).
Technical behavior: Known for respecting technical levels well. SMC order blocks and FVGs are highly reliable on EURUSD.
"Analyze EURUSD on the daily and 4-hour charts. Show me the current trend, key SMC levels, and any institutional setups forming. When is the next major ECB or Fed event that could affect this pair?"
Characteristics: The most volatile of the major pairs. Larger intraday ranges than EURUSD. More responsive to UK-specific political and economic developments.
Key drivers: Bank of England policy, UK inflation and employment data, Brexit-related political developments, and global risk sentiment.
Best trading windows: London Open is the primary window for GBPUSD — the pair frequently makes its most significant daily move in the first 2 hours of the London session.
Technical behavior: Excellent for SMC analysis. Liquidity sweeps and kill zone moves are very consistent on GBPUSD. The London Kill Zone on GBPUSD is considered by many SMC traders as the single best intraday setup in forex.
"Full SMC analysis on GBPUSD on the 1-hour chart. Show me the Asian session range, any sweep of those highs/lows during the London Open, and the current intraday structural direction."
Characteristics: Heavily influenced by risk sentiment. When global markets are in "risk-on" mode (investors confident, stocks rising), the Yen typically weakens (USDJPY rises). In "risk-off" mode (fear, flight to safety), the Yen strengthens (USDJPY falls).
Key drivers: Bank of Japan yield curve control policy (historically keeping rates near zero), US Treasury yields, and global risk appetite.
Best trading windows: Both the Tokyo session (00:00-09:00 UTC) and the NY session are active for USDJPY.
Technical behavior: Can trend for extended periods due to the persistent interest rate differential. Moving average trend-following strategies work particularly well.
"Show me USDJPY on the weekly and daily charts. What is the current trend? What is the US-Japan interest rate differential and how is it affecting the pair?"
Characteristics: Australia's economy is heavily commodity-dependent (iron ore, coal, gold). The Australian Dollar often moves in correlation with commodity prices and Chinese economic activity.
Key drivers: Reserve Bank of Australia rate decisions, iron ore prices (China's largest buyer), Chinese PMI data, and global risk sentiment.
Correlation: AUD often moves with risk-on sentiment (similar direction to stocks) and commodity prices. When China's economy is strong, AUD tends to strengthen.
"Is AUDUSD correlated with iron ore prices right now? Show me both on a chart and explain the current RBA monetary policy stance and its impact."
Currency pairs do not move in isolation. Many pairs are significantly correlated — knowing these relationships prevents inadvertently doubling or tripling your exposure.
Positive Correlation (pairs move in the same direction):
Negative Correlation (pairs move in opposite directions):
Practical implication: If you are long EURUSD and also long GBPUSD with equal position sizes, you effectively have 2× exposure to "USD weakness." This is fine if intentional, but must be understood and managed.
"What is the current 30-day price correlation between EURUSD, GBPUSD, and AUDUSD? If I take long positions in all three, how is my net USD exposure affected?"
| Currency Pair | Best Session | Why |
|---|---|---|
| EURUSD | London / NY Overlap | Highest institutional volume |
| GBPUSD | London Open | BOE and UK data releases; largest intraday moves |
| USDJPY | Tokyo / NY | Both sessions are active |
| USDCAD | NY Session | Overlaps with Canadian data and oil moves |
| AUDUSD | Sydney / Tokyo | RBA and Chinese data often released overnight |
| GBPJPY | London Open | Maximum volatility; institutional activity |
The worst time to trade any pair: during the low-volume periods (mid-Asian session, US midday lull). Spreads are wider, moves are erratic, and stop hunts are more common with no follow-through.
"Show me GBPUSD on the 1-hour chart for the last 5 trading days. Mark the London Open Kill Zone. What is the average move during this window? How does it compare to midday hours?"
SMC concepts — order blocks, FVGs, liquidity sweeps, and session kill zones — work across all forex pairs, but some pairs exhibit these patterns more consistently:
GBPUSD on 1-hour: The most consistent liquidity sweep setups, particularly during London Open. Asian range sweeps are extremely reliable.
EURUSD on 4-hour: Institutional order blocks and FVGs respect each other reliably. Excellent for swing trades of 1-5 days.
GBPJPY on 1-hour: Maximum volatility version of SMC trading. Larger swings, larger profits, but also larger losses if structure analysis is wrong.
USDJPY on daily: Long-term institutional trends are particularly clear. Multi-week order blocks on the daily chart provide excellent swing trade entry zones.
"Run a full SMC analysis on [forex pair] across daily and 4-hour timeframes. Show me the structural bias, all active order blocks and FVGs, recent liquidity sweeps, and highlight any confluence zones near current price."