Common Currencies traded in the FX Market.

In the FX market, currencies are traded in pairs e.g. EUR/USD,
USD/CAD, GBP/USD and USD/JPY etc. In pairs, the numerator
is called the ‘base’ currency while the denominator is the
‘counter’ or ‘quote’ currency. While the gamut of currencies
traded worldwide covers practically every national currency,
in a practical sense, only a few are actively traded.

Currency trading usually covers those countries which are
economically sound and politically stable. For example,
the US dollar, Japanese Yen and the Euro are the world’s
most actively traded currencies, based on their economies’
reputation for being reliable, stable and standard. In a
broader spectrum, the eight most traded currencies are the
U.S. Dollar (USD), the Canadian Dollar (CAD), the Euro (EUR),
the British pound (GBP), the Swiss franc (CHF), the New
Zealand dollar (NZD), the Australian Dollar (AUD) and the
Japanese Yen (JPY).

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U.S. Dollar – Official currency of the United States
of America; also known as Buck or Greenback
British Pound – Also known as Sterling, Pound Sterling,
British Pound or the Cable (for the GBP/USD pair), it is
the currency of the United Kingdom and its dependencies.

Canadian Dollar – Official currency of Canada. Also
known as Loonie
Japanese Yen – Official currency of Japan, the Yen.
Swiss Franc – Official currency of Switzerland, commonly
referred to as Swissy.
Euro – The euro is the currency of 12 of the 25 nations
that form the European Union; also known as Fiber.
Australian Dollar – The official currency of the
Commonwealth of Australia; also known as Aussie.
New Zealand Dollar – The New Zealand dollar, often
informally referred to as the Kiwi.

There are almost 27 pairs that come out of the combination
of the above 8 currencies. However, 18 out of the possible
27 pairs are most commonly traded, hence highly liquid and
easy to trade. These pairs are:

Understanding currency pairs and trading

EUR/USD
Here, the Euro is the base currency and the Greenback is
the counter Currency. If the Euro weakens, the pair will
fall, and vice versa, other things being equal. On the other
hand, if the US economy is expected to weaken, the US dollar
is likely to fall, in which case one is advised to make
a short trade on the US dollar. In such a case, the pair
offers a good opportunity to trade long and short and at
the same time, create a sort of hedge.