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What is the Hardest Forex Pair to Trade?

The foreign exchange (forex) market is the largest and most liquid financial market in the world, attracting traders with its potential for high returns. However, not all currency pairs are created equal. Some pairs are notoriously difficult to trade due to their volatility, unpredictability, and the influence of various economic factors. This article delves into what makes a forex pair hard to trade, focusing on some of the most challenging pairs for traders.


Understanding Forex Trading Pairs

Major, Minor, and Exotic Pairs

Forex trading pairs are typically categorized into three groups: major pairs, minor pairs, and exotic pairs.


Major Pairs: These involve the most traded currencies in the world, such as EUR/USD, USD/JPY, GBP/USD, and USD/CHF. They are characterized by high liquidity and relatively low volatility.


Minor Pairs: These pairs do not include the US dollar but involve other major currencies like EUR/GBP, EUR/AUD, and GBP/JPY. They are less liquid than major pairs and often more volatile.

Exotic Pairs: Exotic pairs consist of a major currency paired with a currency from a developing or smaller economy, such as USD/TRY, USD/ZAR, or EUR/TRY. These pairs are known for their high volatility and lower liquidity.

Factors Influencing Forex Pair Difficulty

Several factors can make a forex pair particularly challenging to trade:

1. Volatility: High volatility can lead to rapid and unpredictable price movements, making it difficult to predict and manage risk.

2. Liquidity: Low liquidity can result in wider spreads and slippage, making it harder to execute trades at desired prices.

3. Economic and Political Stability: Currencies from countries with unstable economic or political environments tend to be more volatile and unpredictable.

4. Correlation with Other Markets: Some currency pairs are heavily influenced by other financial markets, such as commodities or stock indices, adding another layer of complexity.

5. Market Sentiment: Public perception and speculative activities can cause sudden and erratic movements in certain currency pairs.

The Hardest Forex Pairs to Trade

1. GBP/JPY (British Pound/Japanese Yen)

Volatility and Unpredictability

GBP/JPY is often cited as one of the most challenging pairs to trade due to its high volatility. The British pound and Japanese yen are both subject to significant economic and political influences, leading to frequent and sometimes severe price swings.

Influencing Factors

Economic Data: Economic releases from both the UK and Japan can have a profound impact on this pair. Key indicators include GDP growth rates, employment figures, and inflation data.

Political Events: Brexit negotiations, changes in government policies, and geopolitical tensions in Asia can all contribute to the pair’s volatility.

Risk Sentiment: The Japanese yen is often seen as a safe-haven currency, while the British pound is more risk-sensitive. Shifts in global risk sentiment can cause sharp movements in GBP/JPY.

2. USD/TRY (US Dollar/Turkish Lira)

Extreme Volatility and Economic Uncertainty

USD/TRY is another pair known for its extreme volatility. The Turkish lira is highly sensitive to economic and political developments in Turkey, leading to erratic price movements and wide spreads.

Influencing Factors

Inflation Rates: Turkey has struggled with high inflation rates, which directly impact the value of the lira.

Political Instability: Political turmoil, changes in government leadership, and international relations can cause significant fluctuations in USD/TRY.

Central Bank Policies: The Turkish Central Bank’s monetary policies, particularly its interest rate decisions, play a crucial role in the pair’s movements.

3. EUR/CHF (Euro/Swiss Franc)

Low Volatility and Central Bank Interventions

While EUR/CHF is not as volatile as GBP/JPY or USD/TRY, it presents its own set of challenges. The Swiss National Bank (SNB) has a history of intervening in the forex market to maintain economic stability, making this pair difficult to predict.

Influencing Factors

Central Bank Interventions: The SNB’s actions, including negative interest rates and direct market interventions, can lead to unexpected price movements.

Economic Data: Economic indicators from both the Eurozone and Switzerland, such as GDP growth, inflation, and employment figures, influence EUR/CHF.

Safe-Haven Status: The Swiss franc is considered a safe-haven currency. During times of economic uncertainty, demand for CHF can increase, impacting the pair.

4. NZD/USD (New Zealand Dollar/US Dollar)

Commodity Dependence and Low Liquidity

NZD/USD is influenced heavily by commodity prices, particularly dairy products, as New Zealand’s economy is largely dependent on agriculture. This dependence, combined with relatively low liquidity, makes the pair challenging to trade.

See Also: What is the Most Profitable Time to Trade Forex?

Influencing Factors

Commodity Prices: Fluctuations in global dairy prices can cause significant movements in NZD/USD.

Economic Data: Key economic indicators from New Zealand and the US, such as GDP growth, employment figures, and interest rates, impact the pair.

Market Sentiment: The New Zealand dollar is considered a risk-sensitive currency, and changes in global risk sentiment can lead to volatility in NZD/USD.

5. USD/ZAR (US Dollar/South African Rand)

High Volatility and Political Risk

USD/ZAR is known for its high volatility and susceptibility to political and economic developments in South Africa. The pair often experiences wide price swings and large spreads.

Influencing Factors

Economic Data: Key economic indicators from South Africa, such as GDP growth, inflation, and employment figures, impact USD/ZAR.

Political Events: Political instability, corruption scandals, and changes in government policies can cause significant fluctuations in the pair.

Commodity Prices: South Africa is a major exporter of gold and other commodities. Fluctuations in commodity prices can influence the value of the rand.

Strategies for Trading Difficult Forex Pairs

1. Risk Management

Effective risk management is crucial when trading volatile forex pairs. This includes setting appropriate stop-loss orders, managing position sizes, and avoiding over-leveraging.

2. Technical Analysis

Technical analysis can help traders identify trends, support and resistance levels, and potential entry and exit points. Tools such as moving averages, Bollinger Bands, and the Relative Strength Index (RSI) are commonly used.

3. Fundamental Analysis

Understanding the economic and political factors that influence a currency pair is essential. Traders should stay informed about key economic indicators, central bank policies, and geopolitical events.

4. Sentiment Analysis

Market sentiment can have a significant impact on currency pairs. Traders can gauge sentiment through news analysis, social media, and sentiment indicators such as the Commitment of Traders (COT) report.

5. Diversification

Diversifying trading strategies and not focusing solely on one challenging pair can help mitigate risk. Traders can also explore trading less volatile pairs to balance their portfolio.


Trading forex pairs is inherently challenging, but some pairs are particularly difficult due to their volatility, liquidity, and the influence of various economic and political factors. GBP/JPY, USD/TRY, EUR/CHF, NZD/USD, and USD/ZAR are among the hardest pairs to trade, each presenting unique challenges for traders.

By employing effective risk management, utilizing technical and fundamental analysis, and staying informed about market sentiment, traders can navigate the complexities of these difficult forex pairs. Understanding the factors that influence these pairs and adopting a disciplined approach can help traders improve their chances of success in the dynamic and often unpredictable forex market.

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