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Currency Pairs

 

Among all the currency pairs traded in Forex market U.S. dollar is the most widely traded currency on the planet. The USD can be paired with all other major currencies. Sometimes it is acting as an intermediary in triangular currency transactions. The reason is that the USD performs as an unofficial global reverse currency, held by almost every central bank and institutional investment entity worldwide.

 

Abbreviation Name, nickname
EURUSD Euro vs US dollar
GBPUSD British pound vs US dollar
USDJPY US dollar vs Japanese yen
USDCHF US dollar vs Swiss frank
AUDUSD Australian dollar vs US dollar
USDCAD US dollar vs Canadian dollar
NZDUSD New Zealandian dollar vs US dollar


Additionally, as a result of an international acceptance of U.S. dollar, many countries use it as an official currency, as opposing to a local currency, the procedure known as dollarization. In addition, being considered an informal alternative form of payment, the U.S. dollar may be commonly accepted in other countries.


The dollar is also a significant aspect in the Forex rate market, where it may act as a standard or target rate for countries, which prefer to fix or peg their currencies to the USD's value.


Often countries fix their exchange rates to the USD to stabilize their exchange rate, rather than allowing Forex market to fluctuate its relative value.

Another essential aspect of the USD for beginners in Forex market is to understand that the dollar is also used as a standard currency for most commodities.

 

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