Top 10 Most Volatile Currency Pairs in 2024

In the fast-paced world of Forex trading, staying ahead of market trends is essential for success. One crucial aspect that traders must grasp is volatility—the measure of fluctuation in currency exchange rates. Volatility not only shapes trading strategies but also presents both opportunities and challenges for traders worldwide.

As we anticipate the opportunities and challenges that 2024 brings, we must peek over the horizon and explore the potential movers and shakers in the foreign exchange market. In this article, we'll delve into the expected Top 10 most volatile Forex pairs for 2024. From the well-trodden paths of Major pairs to the less explored territories of Crosses and Exotics, let's embark on this journey to uncover where the most significant fluctuations are likely to occur.

Without further ado, here's a glimpse of the Top 10 most volatile Forex pairs for 2024:

• AUD/USD (Australian Dollar/US Dollar)
• AUD/JPY (Australian Dollar/Japanese Yen)
• NZD/JPY (New Zealand Dollar/Japanese Yen)
• USD/TRY (US Dollar/Turkish Lira)
• GBP/AUD (British Pound/Australian Dollar)
• USD/ZAR (US Dollar/South African Rand)
• USD/BRL (US Dollar/Brazilian Real)
• CAD/JPY (Canadian Dollar/Japanese Yen)
• GBP/JPY (British Pound/Japanese Yen)
• USD/MXN (US Dollar/Mexican Peso)

Whether you're a seasoned trader looking to fine-tune your strategy or a novice eager to further your understanding, this insight into volatility could prove invaluable. Let's explore the factors driving volatility and analyze each currency pair's unique characteristics to confidently navigate the Forex market in the year ahead. .

Understanding Volatility in Forex Trading

Volatility in Forex trading refers to the degree of variation or fluctuation in a currency pair's exchange rate over a certain period. It reflects how much the price of a currency pair changes and how rapidly these changes occur. Forex markets are renowned for their volatility, with exchange rates capable of fluctuating rapidly due to various factors.

Factors Influencing Volatility in Forex Trading

1. Economic Data Releases

Economic indicators such as GDP, employment rates, and inflation reports can significantly impact a currency pair's volatility. Positive or negative surprises in economic data can lead to sharp price movements as traders adjust their positions based on changing economic conditions.

2. Central Bank Decisions

Decisions made by central banks, such as changes to interest rates or monetary policy, can have a profound effect on currency volatility. Traders closely monitor central bank announcements for signals about future policy directions, which can influence investor sentiment and drive currency movements.

3. Political Events

Major political events such as elections, changes in government, or geopolitical tensions can cause volatility in currency markets. Political uncertainty can undermine investor confidence and lead to increased risk aversion, resulting in currency fluctuations as traders react to changing geopolitical dynamics.

4. Market Sentiment

Trader sentiment plays a crucial role in driving currency volatility. Positive sentiment can increase demand for a currency, driving its value higher, while negative sentiment can trigger selling pressure and drive prices lower. Traders closely monitor market sentiment indicators to gauge investor confidence and anticipate potential currency movements.

5. Liquidity Levels

Liquidity refers to the ease with which a currency pair can be bought or sold without causing significant price movements. Currency pairs with lower liquidity tend to be more volatile, as they are more sensitive to changes in trading activity. Illiquid markets may experience sharp price swings during heightened volatility or thin trading conditions.

6. Major News Events

Unexpected news events such as natural disasters, geopolitical crises, or economic shocks can increase currency market volatility. News-driven volatility can result in rapid price movements as traders react to new information and adjust their positions accordingly.

Each of these factors can contribute to fluctuations in currency prices, making them important considerations for Forex traders seeking to navigate volatile market conditions effectively. By staying informed and attuned to these factors, traders can better anticipate market movements and make informed trading decisions.

Understanding volatility is paramount for traders as it presents both opportunities and risks. High volatility implies larger price movements, offering potential for higher profits but also carrying increased risk. Conversely, low volatility suggests smaller price movements and lower trading risks, albeit with fewer profit opportunities.

At JustMarkets, traders gain access to a comprehensive calendar presenting the most important events that can cause volatility in the Forex market. This tool helps traders stay informed and anticipate market movements, enhancing their ability to capitalize on trading opportunities while managing risk effectively.

Types of Forex Pairs

Forex pairs are categorized into three main types, each with its own distinctive characteristics and trading dynamics:

• Major Pairs. Major currency pairs are the most traded in the Forex market and typically include the US Dollar on one side. Examples of major pairs include EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD, and NZD/USD. Major pairs are characterized by high liquidity, lower spreads, and high trading volume, making them popular among traders.
• Minor/Cross Pairs. Minor currency pairs, or cross pairs, do not include the US Dollar. These pairs represent major economies' currencies against each other, excluding the US. Examples include EUR/GBP, EUR/AUD, GBP/JPY, CHF/JPY, and EUR/JPY. Minor pairs generally have larger spreads and may exhibit lower liquidity than major pairs.
• Exotic Pairs. Exotic currency pairs involve a major currency and a currency from a small or emerging economy. Examples include USD/PLN (US Dollar/Polish Zloty), GBP/ZAR (British Pound/South African Rand), and JPY/NOK (Japanese Yen/Norwegian Krone). Exotic pairs often have wider spreads and lower liquidity compared to major or minor pairs, but they can also present opportunities for significant price movements and trading opportunities.

Understanding the characteristics of each type of Forex pair is essential for traders as it helps them choose the most suitable pairs based on their trading strategy, risk tolerance, and market conditions. Whether trading major pairs for their high liquidity, minor pairs for their unique trading opportunities, or exotic pairs for their potential for large moves, traders can diversify their portfolio and capitalize on various market dynamics in the Forex market.

Top 10 Most Volatile Forex Pairs in 2024

The top 10 most volatile Forex pairs for 2024 offer traders high potential returns and increased risk due to their significant price fluctuations. Here's an analysis of each pair's volatility and the factors influencing their movements:

AUD/USD (Australian Dollar/US Dollar)

This pair can be heavily influenced by commodity prices, particularly gold and metals, as Australia is a major exporter. Economic data from both Australia and the United States, as well as global risk sentiment, can also impact its volatility.

AUD/JPY (Australian Dollar/Japanese Yen)

The AUD/JPY pair often carries a high-interest rate differential, making it sensitive to changes in risk sentiment and economic conditions in Australia and Japan. Factors such as commodity prices and global risk sentiment can also affect its volatility.

NZD/JPY (New Zealand Dollar/Japanese Yen)

Similar to AUD/JPY, NZD/JPY can carry a high-interest rate differential and is sensitive to changes in risk sentiment and economic conditions. Additionally, dairy prices, a significant part of New Zealand's economy, can impact its volatility.

USD/TRY (US Dollar/Turkish Lira)

Known for its extreme volatility, USD/TRY can be influenced by geopolitical events, monetary policy decisions, and Turkey's economic situation. Political instability and economic data releases from Turkey can also contribute to its volatility.

GBP/AUD (British Pound/Australian Dollar)

This pair sees volatility from economic changes in both the UK and Australia, including commodity price shifts and political events such as Brexit-related news. Economic data releases from both countries can also impact its volatility.

USD/ZAR (US Dollar/South African Rand)

USD/ZAR is an emergent market pair that can swing widely based on factors such as commodity prices, particularly gold, and economic and political conditions in South Africa. Economic data releases and political developments in both countries can also influence its volatility.

USD/BRL (US Dollar/Brazilian Real)

USD/BRL can be highly volatile, especially considering economic indicators from Brazil, an emergent market, and fluctuating commodity prices, particularly related to agriculture. Political developments and central bank decisions in Brazil can also impact its volatility.

CAD/JPY (Canadian Dollar/Japanese Yen)

CAD/JPY is influenced by the health of global crude oil markets as Canada is one of the world's leading oil exporters. Economic data releases from Canada and Japan and global risk sentiment can also affect its volatility.

GBP/JPY (British Pound/Japanese Yen)

Known as the "Beast" due to its potential for rapid price shifts, GBP/JPY is influenced by economic changes in both the UK and Japan, including interest rate differences and political instability. Economic data releases and geopolitical events can also impact its volatility.

USD/MXN (US Dollar/Mexican Peso)

USD/MXN is an emergent market pair subject to political changes and economic events in Latin America and the U.S., including commodity price shifts and geopolitical developments. Economic data releases from both countries can also contribute to its volatility.

Understanding the influencing factors behind each pair's volatility is crucial for traders seeking to capitalize on their potential trading opportunities while effectively managing the associated risks.

How to Measure Volatility in Currency Pairs

Volatility in currency pairs can be measured using various indicators and techniques, providing traders with valuable insights into market conditions. Here are some commonly used methods to measure volatility:

• Average True Range (ATR). ATR is a popular indicator that measures the average range between the high and low prices over a specified period, commonly 14 days. A higher ATR value indicates higher volatility, while a lower value suggests lower volatility. It's important to note that ATR does not predict price direction but rather the degree of price movement.

  

• Bollinger Bands. Bollinger Bands are volatility indicators that consist of a moving average line and two bands plotted above and below the moving average. The bands' width represents the currency pair's volatility, with wider bands indicating higher volatility and narrower bands suggesting lower volatility. When the bands contract (a 'squeeze'), it signals low volatility, while widening bands indicate high volatility.
• Volatility Index (VIX). While not explicitly related to Forex markets, the Volatility Index (or VIX) reflects market expectations for future volatility. Derived from S&P 500 index options, the VIX is often called the "fear gauge" or "fear index." Traders use the VIX to understand market sentiment and anticipate potential large market moves, which can indirectly impact currency pair volatility.
• Currencies Implied Volatility. This measure is derived from the prices of options associated with a particular currency pair. It reflects market expectations for future price fluctuations in the currency pair. Higher implied volatility suggests a greater likelihood of significant price movements in the future, while lower implied volatility indicates expectations for smaller price movements.
• Historical Volatility. Historical volatility uses past price data to calculate and gauge the level of volatility in a currency pair over a specific period. It typically involves measuring the standard deviation or variance of a currency pair's price from its average value. Historical volatility provides traders with insights into how volatile a currency pair has been in the past, helping them anticipate potential future price movements.



By utilizing these volatility measurement tools effectively, traders can better understand market dynamics, identify trading opportunities, and implement appropriate risk management strategies to navigate the Forex market with confidence.

Four Strategies for Trading Volatile Currency Pairs

In the dynamic realm of currency trading, where shifts in market sentiment can happen in the blink of an eye, having a strategic approach is paramount. Volatile news events have the potential to trigger significant market movements, offering both opportunities and challenges for traders. This article delves into the top four trading strategies tailored to navigate the intricacies of trading currency pairs during periods of high market volatility. By understanding these strategies, traders can harness the power of volatility to their advantage and make informed decisions even in the face of rapidly changing news landscapes.



1. Breakout Trading Strategy for Currency Pairs

A breakout occurs when the price of a currency pair moves beyond a defined support or resistance level with increased trading volume. Breakouts are used when the market is already near the extreme high or low of the recent past, ensuring that traders don’t miss significant market moves.

• Identifying Key Technical Levels. Key technical levels include support and resistance levels, which can be identified using various tools such as trend lines, moving averages, and Fibonacci retracements. These levels help traders determine potential breakout points in the market.
• Placing Breakout Orders. For specified currency pairs (EUR/USD, USD/JPY, XAU/USD, GBP/USD), traders can place buy-stop orders above resistance levels and sell stop orders below support levels. This allows them to enter the market when a breakout occurs.
• Managing Risk with Stop-Loss and Take-Profit Levels. To manage risk, traders should set stop-loss orders below the low (if buying) or above the high (if selling) of the breakout level. Take-profit levels can be set based on a predetermined profit target or by using trailing stops to lock in gains as the market moves in the desired direction.



For example, the European opening range strategy focuses on EUR/USD and can be applied to other European majors like GBP/USD. The 1-hour breakout strategy for the USD/JPY pair involves trading during the Asian session when the market is more active with the Japanese Yen. A breakout strategy for trading gold involves identifying key support and resistance levels and entering the market when the price breaks through these levels.

2. News-Based Momentum Strategy for Currency Pairs

High-impact economic indicators are data releases that can significantly influence currency markets. Examples include interest rate decisions, employment reports, and GDP growth figures. Traders should focus on these indicators to identify potential trading opportunities in currency pairs.

• Preparing for Economic Calendar Releases. Traders should monitor an economic calendar to stay informed about upcoming high-impact events. This allows them to prepare for potential market volatility and adjust their trading strategies accordingly.
• Trading Leading vs Lagging Indicators. Leading indicators, such as purchasing managers’ indices (PMIs) and consumer sentiment surveys, can provide early signals of economic trends. Lagging indicators, like GDP growth and unemployment rates, confirm existing trends. Traders can use both types of indicators to make informed trading decisions in the currency market.
• Interpreting and Responding to Economic Data. When economic data is released, traders should compare the actual figures with market expectations. If the data significantly deviates from expectations, it can cause increased volatility in currency pairs. Traders can capitalize on these price movements by entering trades based on the direction of the market reaction.



3. Volatility Channel Strategy for Currency Pairs

Volatility channels are a set of lines plotted above and below an asset’s price, representing its historical price range. These channels help traders identify potential trading opportunities by highlighting periods of high and low volatility in the currency market.

• Creating Volatility-Based Trading Ranges. To create volatility-based trading ranges, traders can use tools such as Bollinger Bands, Keltner Channels, or Average True Range (ATR). These indicators help establish dynamic support and resistance levels based on the asset’s historical price movements and volatility.
• Identifying Breakouts and Fakeouts. Breakouts occur when a currency pair’s price moves beyond the volatility channel, indicating a potential trend change. However, not all breakouts lead to sustained trends; some may be fakeouts, which are false signals. Traders can use tools like volume indicators and price action analysis to differentiate between genuine breakouts and fakeouts.
• Using Bollinger Bands and Other Indicators. Bollinger Bands are a popular tool for implementing the volatility channel strategy. They consist of a moving average and two standard deviation bands above and below the moving average. Traders can also use other indicators, such as the RSI or MACD, to confirm signals generated by the volatility channels.





4. High-Impact Economic Events Trading Strategy for Currency Pairs

High-impact economic indicators are data releases that can significantly influence currency markets. Examples include interest rate decisions, employment reports, and GDP growth figures. Traders should focus on these indicators to identify potential trading opportunities in currency pairs.

• Preparing for Economic Calendar Releases. Traders should monitor an economic calendar to stay informed about upcoming high-impact events. This allows them to prepare for potential market volatility and adjust their trading strategies accordingly.
• Trading Leading vs Lagging Indicators. Leading indicators, such as purchasing managers’ indices (PMIs) and consumer sentiment surveys, can provide early signals of economic trends. Lagging indicators, like GDP growth and unemployment rates, confirm existing trends. Traders can use both types of indicators to make informed trading decisions in the currency market.
• Interpreting and Responding to Economic Data. When economic data is released, traders should compare the actual figures with market expectations. If the data significantly deviates from expectations, it can cause increased volatility in currency pairs. Traders can capitalize on these price movements by entering trades based on the direction of the market reaction.



Amid potential gains, the bedrock of successful trading lies in risk management. Integrating measures like stop-loss and take-profit levels, coupled with diversification, ensures a prudent and balanced trading approach in the face of market turbulence.

Tips on Trading Volatile Forex Pairs

Trading volatile currency pairs can be particularly challenging for beginners due to the rapid price movements and increased risk involved. However, with the right approach and mindset, beginners can navigate this terrain effectively. Here are some considerations and tips for beginners venturing into the world of volatile Forex trading:

• Volatile currency pairs can experience sudden and significant price swings, leading to potential losses if not managed properly.
• Beginners may find it difficult to interpret market movements and may be more prone to making emotional trading decisions.



6 Tips for Beginners:

• Understanding the Forex Market. Take the time to learn about the basics of the Forex market, including currency pairs, trading hours, and market participants.
• Risk Management. Implement effective risk management strategies, such as setting stop-loss orders and limiting the size of your positions to a small percentage of your trading capital.
• Awareness of Economic Events. Stay informed about major economic events and announcements that can impact currency markets. JustMarkets provides access to a calendar presenting important events that can cause volatility, aiding beginners in staying updated.
• Emotional Control. Keep emotions in check while trading. Avoid making impulsive decisions based on fear or greed, and stick to your trading plan.
• Continuous Education. Forex trading is a dynamic and evolving field. Continuously educate yourself by reading books, attending webinars, and following reputable financial news sources.
• Practice on Demo Accounts. JustMarkets offers demo accounts where beginners can practice trading most of the named pairs in a risk-free environment. Use demo accounts to familiarize yourself with the trading platform and test your strategies before risking real capital.



By following these tips and considerations, beginners can build a solid foundation for trading volatile currency pairs and increase their chances of success in the Forex market. Remember, consistency, discipline, and patience are key traits of successful traders.

Conclusion

Navigating the Forex market requires a deep understanding of its dynamics and risks. While volatility presents opportunities for profit, it also amplifies the potential for losses. By staying informed, employing sound trading strategies, and practicing risk management, traders can enhance their chances of success in this dynamic environment.

Additionally, continuous education, emotional control, and prudent decision-making are essential for long-term profitability. Remember, success in Forex trading comes from diligent preparation, disciplined execution, and a commitment to ongoing improvement.

FAQ

Which currency pair is most profitable?

The EUR/USD pair holds the throne as the most traded Forex pair globally, known for its liquidity and stability. Traders often turn to this pair for its reliability and consistent profit opportunities.

Which currency pairs trend the most?

Among the trending currency pairs in 2024, the EUR/JPY, NZD/USD, and AUD/USD stand out as the most prominent. These pairs have shown significant trends over the last 12 months, providing numerous trading opportunities.

Which currency pair is not volatile?

The least volatile currency pairs include currencies traded in large volumes with small price movements over a given period. Major currency pairs are highly liquid, so they are less volatile. Examples include USD/CHF, EUR/GBP, and EUR/CHF.

What is the hardest currency pair to trade?

Exotic currency pairs are the most difficult pairs to trade due to their high volatility, limited liquidity, and wide spreads. Examples of such pairs include AUD/NOK, AUD/PLN, AUD/SEK, AUD/SGD, CAD/SGD, CHF/SGD, and others.

Which Forex pair moves the most daily?

Currency pairs like AUD/JPY, AUD/USD, CAD/JPY, NZD/JPY, GBP/AUD, USD/MXN, USD/TRY, and USD/ZAR are known to move the most pips daily, although they may not be the most liquid pairs.

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