Which forex pairs move the most?

Understanding Forex Volatility

When trading forex, understanding which currency pairs tend to move the most can be crucial for strategizing. For this analysis, we've calculated the standard deviation of daily price changes for popular FX pairs to provide insight into typical daily ranges in pips. These numbers represent the typical daily price change in pips that each pair experiences over different lookback periods (1 month, 3 month, etc), where approximately 68% of daily price changes fall within one standard deviation of the average daily change for each respective time period. Traders can use these measurements to contextualize moves in real time. For example, when a pair has moved beyond its typical 1-standard-deviation range, this could signal either mean reversion (the pair returns toward its average behavior) or a potential breakout (the pair continues beyond normal patterns). This metric can also help manage expectations around exit levels and how much profit or loss is reasonable to anticipate within a given day. Understanding these thresholds helps traders assess whether current price action represents normal volatility or something more significant.

Daily price ranges: Popular US dollar pairs

Daily price ranges: Popular non-US dollar pairs

Impact of Global Events on Forex Volatility

The data reveals how global events shape volatility patterns across different timeframes. The dollar-yen pair often exhibits the largest pip movements, particularly over the last three months during a period of increased global volatility. However, recent data suggests volatility has tightened from three months to one month, reflecting market stabilization as earlier disruptions like April's tariff talks subside.

Central bank activities significantly influence these patterns. The absence of recent FOMC meetings has coincided with reduced volatility in the past month. Additionally, non-U.S. dollar pairs like euro-Australian dollar have shown notable price action, offering opportunities for day traders seeking alternatives to major USD pairs.

Why Multiple Time Horizons Matter

1 Week (5 days): Extremely sensitive to immediate market conditions and recent events. With very limited sample size, this timeframe is highly susceptible to outliers and may not be statistically reliable. Best suited for very short-term scalpers or when assessing immediate market reactions to breaking news.

1 Month (21 days): Highly sensitive to recent conditions but susceptible to outliers due to small sample size. Best for traders operating in rapidly changing environments.

3 Month (63 days): Balances recent sensitivity with statistical robustness. Captures major policy announcements and central bank cycles while filtering short-term noise.

6 Month (126 days): Most statistically robust, capturing major volatility events and providing stable baselines. Less sensitive to recent changes but excellent for risk management and identifying regime changes.

Practical Application: Compare timeframes to assess market conditions - all elevated suggests new volatility regime, shorter timeframes elevated indicates recent disruption, shorter timeframes contracting toward longer-term averages signals return to normalcy. This approach is particularly valuable during transitional periods like the current environment where markets appear stabilizing after earlier volatility spikes.

Choosing the Right Forex Pairs for Trading

Selecting the right forex pairs involves considering not just volatility but also factors like margin requirements and potential return on investment. For instance, while the Australian dollar may have lower pip movements, its lower notional value allows traders to size positions larger, potentially increasing returns on margin. Similarly, the sterling-yen pair has shown substantial price action, offering over 100 points of movement, which can be appealing for traders looking to capitalize on extreme price shifts. As traders navigate these options, understanding the nuances of each pair's volatility and market conditions can help in making informed trading decisions.

How to trade forex

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on FX pairs

Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.