Choosing the best currency pairs to trade during different trading sessions can significantly improve your forex trading strategy. The forex market operates 24 hours a day, divided into three major sessions: the Asian, European, and North American sessions. Each session has its unique characteristics, influencing which currency pairs are most favourable to trade. Below, we’ll explore the best pairs for each session and why they perform well.

Understanding Forex Trading Sessions

Forex trading is divided into three main sessions based on the world’s major financial hubs:

1. Asian Session (Tokyo): Active from 11 PM to 8 AM GMT.
2. European Session (London): Active from 7 AM to 4 PM GMT.
3. North American Session (New York): Active from 12 PM to 9 PM GMT.

Each session has varying levels of activity, liquidity, and volatility, making certain currency pairs more profitable depending on the session.

Best Pairs for the Asian Session

During the Asian session, market activity focuses on currencies from the Asia-Pacific region. Liquidity tends to be lower than in other sessions, but currency pairs tied to the region often experience higher volatility.

• AUD/USD: High liquidity as both the Australian and US markets overlap during part of the session.
• USD/JPY: A popular pair in this session due to the high involvement of the Japanese yen.
• AUD/JPY: Frequently traded due to the proximity and strong trade relationships between Japan and Australia.
• NZD/USD: The New Zealand dollar is most active during the Asian session.

These pairs offer consistent movement during this session due to their regional relevance and economic data releases.

Best Pairs for the European Session

The European session, particularly the London session, is the most active and liquid trading period. A significant portion of daily forex trading volume occurs here, making it ideal for major currency pairs.

• EUR/USD: High liquidity and volatility due to the eurozone and US market overlap.
• GBP/USD: Increased movement as London is the financial hub for the British pound.
• EUR/GBP: Often active due to ongoing trade relationships and economic ties within Europe.
• USD/CHF: Popular for traders seeking safe-haven currencies, as Switzerland plays a key role in global finance.

During this session, spreads are narrower, making trading costs lower for these pairs.

Best Pairs for the North American Session

The North American session overlaps with the European session for several hours, resulting in heightened liquidity and volatility. Key US economic data is released during this period, further driving market activity.

• USD/CAD: Active due to the close economic ties between the US and Canada and the role of oil in the Canadian economy.
• EUR/USD: Maintains high liquidity as the world’s most traded currency pair.
• GBP/USD: Volatile during this session due to data releases from both the US and the UK.
• USD/JPY: Strong activity during this session, especially as US and Japanese markets adjust positions.

These pairs often experience significant price action, ideal for traders seeking opportunities during this session.

Best Pairs During Overlaps

Session overlaps create peak trading periods with high liquidity and volatility. The most notable overlap occurs between the European and North American sessions.

• EUR/USD: Highest traded volume globally during this overlap.
• GBP/USD: Active due to significant data releases from the UK and US.
• USD/JPY: Moves sharply as traders adjust to both US and Asian market developments.

Practical and Actionable Advice

• Focus on Major Pairs: Majors like EUR/USD, GBP/USD, and USD/JPY provide higher liquidity and lower spreads.
• Trade During Overlaps: Overlapping sessions provide the most favourable conditions for active traders.
• Adjust to Volatility: Certain pairs, like GBP/JPY, are highly volatile and suited for risk-tolerant traders.
• Monitor Economic News: Track data releases and geopolitical events relevant to the session you are trading.

FAQs

What currency pairs are best for beginners?
Pairs with high liquidity and lower volatility, such as EUR/USD and USD/JPY, are best for beginners.

Why is EUR/USD popular during all sessions?
EUR/USD has the highest trading volume globally, providing consistent liquidity and favourable trading conditions throughout the day.

Should I avoid trading exotic pairs during the Asian session?
Yes, exotic pairs have lower liquidity and higher spreads, making them less favourable in the Asian session.

When is the best time to trade GBP/USD?
The European and North American session overlap provides the best time due to increased volatility and liquidity.

Is USD/JPY active during the London session?
USD/JPY sees moderate activity during the London session but peaks during the Asian and North American sessions.

What pairs have the lowest spreads?
Major pairs like EUR/USD, GBP/USD, and USD/JPY typically have the lowest spreads.

How does news affect trading sessions?
Economic news and data releases increase volatility and trading volume, especially during session overlaps.

Why is AUD/USD best for the Asian session?
AUD/USD is influenced by Australian market activity and commodity-related news, aligning with the Asian session’s hours.

What pairs are good for scalping?
High-liquidity pairs such as EUR/USD and USD/JPY are ideal for scalping due to tighter spreads and frequent price movements.

What session is best for trading commodities like oil?
The North American session is best for oil-related currency pairs like USD/CAD due to overlapping US and Canadian markets.

Conclusion

Understanding the best pairs to trade during each session allows traders to maximise their opportunities while minimising risk. Tailoring your strategy to session-specific pairs can lead to more consistent success. For more insights into trading strategies, explore our exclusive resources at Traders MBA.