Trading Major Pairs

Trading Major Pairs Using Fundamental Analysis

Thu Apr 01 2021 15:49
Choosing a currency pair for foreign exchange traders is not easy. Some forex market traders want to trade in greenback currency pairs while others want major pairs. Which one is right for you? All these forex pairs have their values and importance. The more important thing is to conduct the analysis perfectly. 

We know that even the expert traders in the financial markets are not that expert. But you can make your trading portfolio beneficial with analysis. There are some proven trading analysis methods available. As a currency trader, you can use these methods to analyze the foreign currency market.  

Fundamental Analysis for Major Pairs 

Fundamental analysis is one of the most important and best trading analysis tools. This trading tool can be used to analyze stocks as a stock market trader. This trading method can also be used to trade major currency pairs. Similarly, you can use fundamental analysis for other trading markets. 

A trader who trades commodities can also use it in the commodity trading market. But here we will let you know how you can trade forex currency pairs using fundamental analysis. We will tell you how you can achieve profitable trading while trading forex. But we will talk particularly about major forex pairs. 

What Are These Pairs? 

Major currency pairs can also be known as safe-haven currency pairs. Also, a trader can state that major currency pairs include the currencies of major countries. 

There can be different statements or definitions about these pairs. The currency pairs that include the United States Dollar, are also known as major currency pairs.  

Forex market trading can be more beneficial for you if you choose major currency pairs. Some expert traders mention that currency pairs that see most of the fluctuations are known as major currency pairs. 

Major Currencies 

Before we jump into the major section where we will learn about trading major pairs using fundamental analysis. Almost, there are eight major currencies used by various market traders. 

No matter if you are a short term trader, intraday trader or long term trader. You have to deal with these major currencies and pairs made up of them & the following are eight of these major currencies. 
  • US-dollars (USD) 
  • Canadian Dollar (CAD) 
  • Australian Dollar (AUD) 
  • Japanese Yen (JPY) 
  • British Pound or Pound Sterling (GBP) 
  • New Zealand Dollar (NZD) 
  • Swiss Franc (CHF) 
  • Euro (EUR) 

Major Currency Pairs 

There are many currency pairs in the global market but most currency traders classify major currency pairs in various ways. Following are some of the common types of major currency pairs. 

4 Most Common Major Pairs 

Following are the four most common major currency pairs & these currency pairs include USD in them.  
  • EUR/USD 
  • JPY/USD 
  • CHF/USD 
  • GBP/USD 

Other Pairs 

AUD/USD Other than the above mentioned four pairs, there are three other pairs too. These pairs also include the USD in each. Along with it, these pairs have a major currency included & the following are these pairs. 
  • AUD/USD 
  • CAD/USD 
  • NZD/USD 
So there are eight major currencies in the world and there are seven major currency pairs divided into two sections. 

Analyzing Major Pairs Using Fundamental Analysis 

Now the next important thing is to conduct fundamental analysis to evaluate these major currency pairs. Major currency pairs don't mean that they are always going high. In the market sentiment, they can also go down in currency exchange markets. And also you cannot trade all the currency pairs at once. 

That is why you need to analyze the fundamentals of value investing. So here is the step by step guide to analyzing major currency pairs using fundamental analysis. 

Choose One Or Two Major Currency Pairs 

The first thing you need to do is to choose the currency pairs. Decide whether you want to analyze a single pair or multiples. There are different pairs you can use. Also, there are different ways to choose the right currency pairs for you. 

You can use one which is your native currency and the other one will be USD. If your native currency is the American Dollar then you can choose any other.  

Analyzing The USD 

As a major currency pair trader, you need to analyze the United States Dollar. No matter from which country you belong to. Also, it doesn't matter if you have chosen which major currency pair. 

The United States Dollar will be always there in your currency pair. So it is always necessary and important to analyze the US dollar. Fluctuation in USD makes a greater impact on all the associated pairs.  

Tracking Trading Indicator 

Just similar to technical trading or technical analysis, you need some trading indicators. You don't have an option of technical indicators. But you can simply choose factors as indicators to track USD. 

There are several factors that you will need in your fundamental analysis. Following are these factors that you need to follow and track.  
  • Economic Condition of The US 
  • Charting Of The US Dollar 
  • Social-Political Policies Of The US 
  • Global Economic Recession 
  • Global Economic Growth 
  • Market Correlation Of The USD 
  • Authorized Policies Of The USA 
Here while analyzing the United States Dollar, you need to track the USA. Whatever happens in the USA is going to directly impact the USD in the market. Keep an eye on the economic, political and social situations and events. 

The global markets are also dealing with the USD as the base currency. So you need to study a little bit more about global markets also. Market correlation factor will also matter here. Keep an eye on crude oil trading, gold trading markets, etc.  

Analyzing The Other Currency 

Other than the USD there will be another currency included in your forex pair. You also have to evaluate that currency pair. For this, you will have to look into the country whose base currency you are trading with the USD. 

For instance, if you are trading JPY with the USD, then you need to keep an eye on Japan. All the finance-related events that happen in Japan are required to be tracked. Just like USD, you will also notice higher fluctuations in JPY.  

Summary - Trading Major Pairs Using Fundamental Analysis 

Trading foreign currencies with the help of fundamental analysis can be helpful. And if you are trading major currency pairs, then it becomes quite easier. So it is better to choose the major currency pair for your investment portfolio. You just have to conduct fundamental analysis for different purposes. 

There must be some purposes while conducting fundamental analysis. Major purposes that a forex trader has are price fluctuations, intrinsic value, and future price forecasts. After conducting foreign currencies analysis, you will get all these outputs. Verify the output that you get from the whole process.  

Now make trading decisions according to your trading strategy that includes fundamental analysis. Also, you can get some trading strategies available on the web. But you will have to customize the trading plan according to your trading technique or trading approach. Whatever strategy you pick, ensure to execute and test it.  

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