Currency pairs with high volatility – how to trade them

There is no doubt that the foreign exchange market is subject to a handful of factors that are seen to affect the volatility of currency pairs. With this understanding, many traders have decided to streamline their strategies to leverage some of the most volatile currency pairs. 

The volatility of any currency can be measured by calculating the variance or standard deviation of the price movement. This insight gives traders a perfect idea of the tendency of a particular currency to change in price relative to its average after a set period.

Another way to gauge market volatility is to look at the true average range of currency pairs to determine how much it has changed in price. Although high volatility currency pairs increase the potential reward, it also presents a greater risk.

NB: All charts represented below give you insight into the currency pair volatility.

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The AUD/JPY currency pair is one of the most volatile pairs and represents the pairing of the Australian dollar against the Yen. The volatility enjoyed by this currency pair is majorly due to the relationships between both countries.

On the one hand, the Australian dollar (AUD) is a commodity currency which implies that it is directly linked to the volume and price of exports from Australia. On the other hand, the Japanese Yen is considered by traders to be a safer asset in times of economic instability.

The above chart shows the price movement of the Australian dollar against the Japanese Yen
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Having seemingly opposing currencies paired together means that the price movement depends on the global economic outlook and, to some extent, on the Australian economy.

How to trade

In trading this currency pair, traders need to stay afloat with the global economic news and development. The good news is that this pair still complies with support and resistance levels, so you may also want to keep your eyes on that.


The USD/ZAR currency pair sets the United States dollar against the South African rand. The primary factor influencing this pair’s volatility is the global price of gold. Being that South Africa is a significant exporter and gold is priced in US dollars makes its price equivalent to the weakness or strength of gold.

Chart showing the volatility of the US dollar against that South African rand

This implies that if gold increases in price, the United States dollar (USD) will likely also move up against the South African rand (ZAR). This means South Africa will get more United States dollars for their gold.

On the flip side, the positive volatility of the US dollar due to gold export will cause more downward movement in the price of the South African rand.

How to trade

Traders looking to trade the USD/ZAR currency pair should firstly carry out sufficient market analysis on the global price of gold and factors that influence the price before opening a position.


Another volatile currency pair is the New Zealand dollar (NZD) against the Japanese Yen (JPY). Similar to the Australian dollar, NZD is also a commodity currency whose value is hinged on the price of agricultural exports from New Zealand. This factor is solely behind the volatility of the currency.

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Chart showing the volatile pair between the New Zealand commodity currency and the safe-haven Japanese Yen

Pairing against the Japanese Yen, which is more liquid, implies that the overall volatility of the currency pair depends on the changes in the price of New Zealand export commodities like eggs, dairy, wood, honey, and meat.

How to trade

Trading the NZD/JPY currency pair means keeping yourself updated with the New Zealand economic growth. At the same time, you work on other technical analysis tools to secure your open position.

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The USD/TRY currency pair revolves around the United States dollar and the Turkish lira. Since 2016, following an unsuccessful coup d’état and subsequent societal purges, the Turkish lira has remained volatile.

The instability in the price of the TRY was evident in the fact that the Turkish lira fell dramatically following the loss to Recep Tayyip Erdoğan in the 2019 elections.

Chart showing the currency pair between the US dollar and the Turkish lira with price instability since 2019

Market experts believe the lira will maintain its volatile state until there are settlements in Turkish politics.

How to trade

Unlike other currency pairs that depend mainly on technical analysis, the national economy, and global export news, the USD/TRY currency poses more volatility risk. Traders looking to trade this pair must keep a close watch on political and economic news coming from Turkey and the United States.

Take home

As much as currency pair volatility presents you with the opportunity to increase your investment capital, you must also understand its risk. In addition to understanding the global and economic market of individual countries, the below steps will help you get started in trading volatile currency pairs:

  • Do your research on your preferred currency pair
  • Carry out fundamental and technical analysis on the currency pair
  • Settle for a comfortable trading strategy that aligns with your risk exposure

Following the steps above does not guarantee 100% positive results but prepares you for dramatic happenings in the volatile market.

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