Forex market is the largest and most liquid financial market in the world, with over $7.5 trillion in daily trading volume as of 2024. When stock markets are slow or uncertain, trading in currencies can be a smart way to diversify your portfolio and explore global financial trends.
Every day, trillions of dollars are traded in the forex market. While there are more than 150 currencies in circulation globally, only handful truly dominate the scene. The Japanese Yen (JPY), Euro (EUR), and British Pound (GBP) — along with the US Dollar (USD) — are the most powerful and frequently traded currencies in the world.
These three non-dollar currencies are not just popular — they are part of what traders call the “four traditional majors.” These are the most important and liquid currency pairs:
EUR/USD – Euro vs US Dollar
USD/JPY – US Dollar vs Japanese Yen
GBP/USD – British Pound vs US Dollar
USD/CHF – US Dollar vs Swiss Franc
It’s important to note that these pairs aren’t necessarily the highest in trading volume today (for example, AUD/USD ranks high too), but the traditional majors have held their influence for decades.
Key reasons behind their Staying Power
The dominance of the Yen, Euro, and Pound can be attributed to several key factors that make them highly attractive to forex participants:
1. Liquidity
EUR, JPY, and GBP these three have the deep, liquid markets. The popularity of EUR/USD as a currency pair means that it is highly liquid and that brokers often offer tight spreads. Equally, it tends to be less volatile than other currency pairs because the US dollar and the euro are backed by the world’s two largest economies. The USD/JPY pair is one of the top three most traded currency pairs in the world. The GBP/USD is another major currency pair with high liquidity and daily trading volumes. When liquidity is most concentrated in this pair, due in part to the fact that this is the time which sees the most overlap in activity for traders in both London and New York.
2. Economic Clout
These currencies part of what traders call the four traditional majors. Japan known as the third-largest economy in the world because of its high-tech manufacturing and export-led growth. The Eurozone accounts for a large share of global exports and imports, and its combined GDP is second only to the U.S. The Pound reputation as a reserve currency. These massive economies give their respective currencies substantial weight in global trade and investment flows.
3. Safe-Haven Status
The euro is seen as a stable and trusted currency, used in global central bank reserves. Yen has known as the safe heavon currency. The British Pound, while more volatile than the euro or yen, still commands respect as one of the oldest and historically strongest currencies in the world.
4. Policy transparency
Policy transparency is another shared trait among these currencies’ central banks. GDP, inflation, employment figures these data is widely available and analyzed, contributing to market transparency and allowing for more informed fundamental analysis. The BoJ also maintains transparency through regular reports and press conferences, although its policies are sometimes seen as more complex due to its unique economic challenges.
5. Central Bank Influence
Another important factor in each currency’s domination is the power of its central bank. All Eurozone countries’ monetary policies are set by the European Central Bank (ECB), which has its main office in Frankfurt. In order to guarantee balanced policy decisions, it incorporates representation from the biggest economies in the region and focuses particularly on price stability. One of the oldest central banks in the world, the Bank of Japan (BoJ) was founded in 1882 and is renowned for its ultra-loose monetary policies, which include setting interest rates close to zero or negative to fend against deflation. It actively participates in currency issuance and money market operations and meets on a regular basis.
Final thoughts
All of these currencies are supported by developed, internationally integrated economies and are overseen by central banks that offer transparent guidelines, consistent statistics, and widely disseminated monetary frameworks. Traders and institutions can rely on the steady atmosphere created by this degree of openness and trust, particularly in unpredictable times.
Compared to developing or exotic pairs, major currency pairs such as EUR/USD, USD/JPY, GBP/USD, and even EUR/JPY provide forex participants a combination of high liquidity, reduced transaction costs, and more predictable behavior. Because of this, they are not only well-liked but also strategically crucial for both short-term trading and long-term portfolio planning.