10 Most Volatile Forex Pairs

The year 2020 has been an unusually volatile one for currency traders. The worldwide pandemic shock, its unprecedented economic impacts and resulting stimulus measures, the hotly contested U.S. election, and dramatic commodity price swings have rocked the forex market. This volatility presents both an extra risk and the possibility of extra rewards for the savvy trader.

Most Volatile Forex Pairs

  1. USDTRY
  2. USDMXN
  3. USDPLN
  4. USDNOK
  5. USDHUF
  6. AUDUSD
  7. GBPUSD
  8. NZDUSD
  9. USDCHF
  10. EURUSD

5 Most Volatile Minor Currency Pairs

Below find a list and descriptions of the top five minor currency pairs ranked by historical volatility. They are more volatile compared to the major fx-pairs ranked on #6 to #10.

1. USDTRY: 9.90% Historical Volatility

This pair consists of the U.S. dollar quoted versus the Turkish lira and is extremely sensitive to the outcome of the 2020 U.S. presidential election. According to some economists, Biden plans to penalize Turkey for their purchase of an air defense system from Russia. The currency pair hit all-time highs before the election and has sold off significantly in the following days.

2. USDMXN: 6.25% Historical Volatility

This pair consists of the U.S. dollar quoted versus the Mexican peso. Due in part to the country's slow response to the COVID-19 pandemic, Mexico's economy is forecast to contract by 9% in 2020. Although the Mexican peso has historically declined in value, the extra volatility seen recently includes a reaction to the overall economic slowdown in Mexico combined with risk averse sentiment among traders and investors.

3. USDPLN: 5.43% Historical Volatility

This pair consists of the U.S. dollar quoted versus the Polish złoty, which is widely forecast to be the best performing currency in Central Europe for 2021. Despite an expected second wave of COVID-19 in Poland, the economic situation has improved in recent months. Outbreaks are expected to be contained, and the złoty is forecast to rise as risk appetite improves in 2021.

4. USDNOK: 5.25% Historical Volatility

This pair consists of the U.S. dollar quoted versus the Norwegian krone. The krone recently lost 30% of its value against the dollar in part due to the current COVID-19 pandemic. The NOK is also highly sensitive to oil prices and was hit especially hard when crude oil prices collapsed in mid-March of 2020. The krone was negatively affected by risk aversion after the oil collapse and coronavirus outbreak.

5. USDHUF: 5.04% Historical Volatility

This pair consists of the U.S. dollar quoted versus the Hungarian forint. The forint has remained under pressure since the onset of the coronavirus pandemic that is expected to continue as new cases are reported in Hungary and other Central European nations. The currency saw a brief rebound after a decision by the National Bank of Hungary (NBH) to tighten monetary policy, although the central bank refrained from raising rates further at their latest meeting in October 2020.

5 Most Volatile Major Currency Pairs

Below find a list and descriptions of the top five major currency pairs ranked by historical volatility in 2020. The most recent one month historical volatility percentages are displayed after each currency pair's codes for comparison purposes.

6. AUDUSD: 3.44% Historical Volatility

This pair consists of the Australian dollar quoted versus the U.S. dollar. It has shown particular volatility in 2020 as a so-called "risk proxy" due to economic risks largely associated with the COVID-19 pandemic and poor trade relations between the U.S. and China. Risk-proxy currencies like the AUD have weakened in this environment since its economy remains closely tied to China's.

7. GBPUSD: 2.79% Historical Volatility

This pair consists of the British pound sterling quoted versus the U.S. dollar. The pound has experienced notably turbulent and highly volatile trading conditions since the 2016 Brexit announcement, and this was further exacerbated by the COVID-19 pandemic.

8. NZDUSD: 2.70% Historical Volatility

This pair consists of the New Zealand dollar quoted versus the U.S. dollar. The COVID-19 pandemic resulted in a flight to quality starting in March 2020 that benefitted the USD at the expense of riskier commodity currencies like the NZD.

9. USDCHF: 2.08% Historical Volatility

This pair consists of the U.S. dollar quoted versus the Swiss franc. USDCHF is often volatile because it has the lowest liquidity level of the top four major currency pairs and is the least traded. The U.S. presidential election and the COVID-19 pandemic have resulted in unusually high levels of volatility in this pair over the past year.

10. EURUSD: 2.07% Historical Volatility

This pair consists of the EU's euro quoted versus the U.S. dollar. EURUSD is the most liquid and traded of the major currency pairs. The pair has been especially volatile in 2020 due to overall macroeconomic uncertainty, government stimulus programs, central bank policy changes, and Brexit negotiations between the EU and UK.

About FX Volatility

Casually used among traders, the term "volatility" usually refers to the size and frequency of market swings. Some forex traders also compute historical volatility for a particular currency pair based on the standard deviation of its exchange rate movements over a given past period of time as a measure of risk.

Volatility can affect forex traders in a number of ways, including the following:

  • Wider market swings mean more risk to worry about when a position is taken.
  • Volatility can affect position sizing.
  • Substantial market moves mean more opportunities to buy low and sell high.
  • Volatility levels impact option pricing.

Currency option prices are often notably affected by the market's anticipation of shifts in the underlying currency pair's volatility. Forex traders can therefore use currency options to take a view on future volatility and direction in a currency pair or to just trade volatility directly. They can buy options if they think volatility will rise or sell them if they think volatility will fall.

Traders can also determine what future volatility is implied by the market's option prices. They do this by using an option pricing model to compute implied volatility from the current exchange rate, other market observables and the option's parameters.

To get an overview of the historical volatility seen in the major and minor currency pairs and crosses over a variety of time frames, check out the table below.

Currency pair

Daily

Weekly

Monthly

GBPTRY

1.70%

4.89%

10.09%

USDTRY

0.88%

5.50%

9.90%

EURTRY

1.64%

3.93%

9.32%

NOKJPY

1.78%

5.42%

6.63%

USDMXN

2.00%

3.27%

6.25%

USDPLN

1.96%

3.25%

5.43%

EURMXN

1.02%

2.21%

5.29%

USDNOK

2.41%

5.19%

5.25%

GBPMXN

1.29%

2.71%

5.18%

USDHUF

2.63%

2.80%

5.04%

USDRUB

2.05%

4.76%

4.76%

NOKSEK

1.25%

3.02%

4.69%

AUDJPY

1.20%

2.47%

4.63%

EURZAR

1.43%

2.66%

4.57%

USDZAR

1.93%

2.52%

4.39%

EURPLN

0.94%

1.87%

4.38%

GBPNOK

1.23%

3.96%

4.33%

EURNOK

1.40%

3.84%

4.08%

ZARJPY

1.23%

2.91%

4.05%

AUDCHF

1.17%

1.62%

3.85%

GBPAUD

0.75%

1.52%

3.81%

SEKJPY

1.31%

3.17%

3.80%

EURHUF

1.42%

1.66%

3.77%

AUDCAD

1.15%

0.85%

3.56%

USDSEK

1.61%

2.98%

3.47%

CADJPY

0.65%

2.38%

3.46%

AUDUSD

2.02%

2.21%

3.44%

EURAUD

1.00%

1.37%

3.19%

USDCZK

1.77%

2.21%

3.06%

AUDSGD

1.25%

1.56%

2.96%

AUDNZD

0.66%

0.77%

2.85%

EURJPY

0.80%

2.13%

2.85%

EURNZD

0.67%

1.24%

2.85%

NZDCAD

0.68%

1.25%

2.82%

NZDCHF

0.68%

1.23%

2.81%

GBPUSD

1.74%

1.54%

2.79%

GBPSEK

0.96%

1.78%

2.74%

NZDUSD

1.48%

1.93%

2.70%

GBPCAD

1.14%

1.44%

2.63%

EURSEK

0.64%

1.68%

2.59%

SGDJPY

0.60%

1.32%

2.59%

GBPJPY

0.91%

1.98%

2.56%

GBPNZD

0.60%

1.14%

2.47%

CHFJPY

0.62%

1.91%

2.46%

USDCNH

0.93%

1.28%

2.46%

EURCZK

0.92%

1.14%

2.44%

NZDJPY

0.80%

2.05%

2.38%

USDCAD

1.15%

2.05%

2.36%

CADCHF

0.78%

1.27%

2.32%

GBPSGD

1.13%

0.92%

2.16%

USDTHB

1.00%

0.73%

2.13%

USDCHF

1.07%

1.50%

2.08%

EURUSD

1.27%

1.88%

2.07%

USDJPY

1.06%

0.99%

2.00%

EURGBP

0.84%

1.36%

1.98%

EURCAD

0.80%

1.09%

1.82%

GBPCHF

0.88%

1.20%

1.80%

CHFSGD

0.58%

0.99%

1.74%

EURSGD

0.70%

1.29%

1.36%

EURCHF

0.45%

0.72%

1.26%

USDSGD

0.84%

0.83%

1.17%

A table of the historical volatility in percent for various currency pairs over time frames ranging from 1 minute to 1 month and sorted by monthly volatility as computed on 11/6/2020. Major currency pairs are highlighted in red if they include the USD or blue if they are crosses. Source: MyFXBook.

To calculate historical volatility yourself, you can use online tools like a forex volatility calculator to determine the historical volatility of a currency pair over a given number of weeks in the past. A sample output from that tool for EURUSD volatility over 52 weeks appears below. It shows how volatility in that pair varied over the time frame analyzed, as well as by hour and trading day. This sort of analysis can be useful if you wish to determine when a currency pair is typically most volatile and to what extent.

Most Volatile Forex Pairs

Daily, hourly and weekday volatility for EURUSD over 52 weeks. Source: Investing.com Forex volatility calculator

Overall, the most volatile currency pairs tend to be the minors and minor crosses, while most of those who undergo forex trading prefer to operate in the far more liquid major currency pairs and major crosses. The 10 most volatile forex pairs of 2020 have therefore been divided into two groups below that correspond to majors and minors.

The table above shows that crosses can also be very volatile, but the detailed rankings below include only the top 5 major and minor currency pairs that involve the U.S. dollar for simplicity's sake.

Conclusion

It usually makes sense to take a currency pair's volatility into account when trading since it provides a measure of the risk involved. Traders can take larger positions in more stable pairs and smaller positions in more volatile pairs as part of the position sizing method used in their forex money management strategy. You can readily determine which pairs are more volatile and which are more stable by using a volatility calculation tool. Learn how to trade the forex market and continue by reading the articles what is forex trading and how does it work and best forex indicators.

Updated: November 10, 2020
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