Foreign exchange is a worldwide decentralized over-the-counter financial market for the trading of currencies. In forex, financial centers around the globe serves as anchors of trading between a wide range of different types of buyers and sellers 24 hours a day, five days a week (The Economist’s Guide to Financial Markets).

Now that you know what is foreign exchange, it is time to familiarize yourself with the currencies traded in this financial market. You will learn that in forex, there are major currencies as well as minor currencies. In this article, we will discuss what are the so-called major currencies in forex trading.

In forex, currencies are traded in pairs. So when we speak of major currencies, we are talking about six different currency pairs, namely:

  • Euro vs. US Dollar (EUR/USD)
  • US Dollar vs. Japanese Yen (USD/JPY)
  • British pound vs. US Dollar (GBP/USD)
  • Australian Dollar vs. US Dollar (AUD/USD)
  • US Dollar vs. Canadian Dollar (USD/CAD)
  • US Dollar vs. Swiss Franc (USD/CHF)

Each currency is defined by a three letter abbreviation known as ISO Code (International Organization for Standardization).

These currency pairs are the most actively traded and constitutes a large share in the foreign exchange markets (GO Markets' Introduction to Foreign Exchange). These currency pairs also exhibit the highest market liquidity i.e. "ability to be sold without causing a significant movement in the price and with minimum loss of value." They are often the most cost effective to trade given the spread between the buy and sell price narrower than that of their less trade counterparts.

Click "Start" to view the slideshow of the world's major currencies.