Trading Major Pairs

Trading Major Pairs Using Fundamental Analysis

Tue May 11 2021 18:46
Choosing a currency pair for forex traders is not easy. Some forex market traders want to trade greenback currency pairs, while others prefer the major pairs. Which one is right for you? All these forex pairs have their value and importance. The most important thing is to do the analysis perfectly. 

 We know that even the expert traders in the financial markets are not that knowledgeable. But you can make your trading portfolio beneficial with the analysis. There are some proven methods of trading analysis. As a forex trader, you can use these methods to analyze the forex 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 to trade forex currency pairs using fundamental analysis. We will tell you how to achieve profitable trading in forex trading. But we will mainly talk about the major forex pairs.

What Are These Pairs? 

Major currency pairs can also be referred to as safe haven currency pairs. A trader may also say that major currency pairs include the currencies of major countries. 

There may be different statements or definitions about these pairs. The currency pairs that include the US dollar are also called major currency pairs. Trading in the forex market can be more beneficial for you if you choose major currency pairs. 

Some experienced traders mention that currency pairs that see the most fluctuations are known as major currency pairs.

Major Currencies 

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

Whether you are a short-term trader, intraday trader or long-term trader. You need to learn about these major currencies and the pairs that consist 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 forex traders classify the major currency pairs in different ways. Below are some of the common types of major currency pairs.

4 Most Common Major Pairs 

Below 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 In addition to the above four pairs, there are three other pairs. These pairs also contain USD in each of them. Along with this, these pairs have a major currency included and 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 

The next important point is to perform fundamental analysis to evaluate these major currency pairs. Major currency pairs do not mean that they always go up. In the market sentiment, they can also go down in the forex markets. And also you cannot trade all the currency pairs at once. 

That's why you need to analyze the basics of value investing. So here is the step-by-step guide to analyze the major currency pairs using fundamental analysis.

Choose One Or Two Major Currency Pairs 

The first thing you need to do is select currency pairs. Decide whether you want to analyze a single pair or multiple pairs. There are different pairs that you can use. There are also different ways to choose the right currency pairs for you. 

You can use one that is your home currency and the other will be USD. If your home currency is American Dollar, you can choose any other one.

Analyzing The USD 

As a major currency pair trader, you need to analyze the United States dollar. It does not matter what country you are from. It also does not matter which major currency pair you have chosen. 

The United States Dollar will always be present in your currency pair. So, it is always necessary and important to analyze the US Dollar. The fluctuation of the USD has a greater impact on all related pairs.

Tracking Trading Indicator 

Similar to technical trading or technical analysis, you need some trading indicators. You do not have the option to choose technical indicators. But you can simply choose factors as indicators to track USD. 

There are several factors that you need in your fundamental analysis. Below are these factors that you need to 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 in analyzing the US dollar, you have to keep the US in mind. Whatever happens in the US will directly affect the USD in the market. Keep an eye on the economic, political and social situations and events. 

The global markets also trade with the USD as the base currency. So you need to learn a little more about the global markets as well. The market correlation factor will also play a role here. Keep an eye on crude oil trading, gold trading markets etc.

Analyzing The Other Currency 

Besides the USD, there will be another currency in your currency pair. You will also need to value this currency pair. To do this, you will need to look at the country whose base currency you are trading with the USD.

For example, if you are trading JPY with the USD, then you need to keep an eye on Japan. Any financial related events that take place in Japan need to be tracked. Just like the USD, you will also see higher fluctuations in the JPY.

Summary - Trading Major Pairs Using Fundamental Analysis 

Trading foreign currencies using fundamental analysis can be helpful. And if you trade the major currency pairs, then it becomes quite easy. So it is better to choose the major currency pair for your investment portfolio. You just need to do the fundamental analysis for different purposes. 

While performing the fundamental analysis, there must be some purposes. Main purposes that a forex trader has are price fluctuations, intrinsic value and future price forecasts. After performing a forex analysis, you will get all these outputs. Check the results you get through the whole process. 

Now make trading decisions according to your trading strategy which includes fundamental analysis. You can also get some trading strategies from the internet. But you need to adjust the trading plan according to your trading technique or approach. Whatever strategy you choose, make sure you execute and test it.

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