Best Currency Pair to Trade During New York Session

Why the New York Session?

The New York session overlaps with the London session for about four hours, from 8 AM to 12 PM EST, which makes it an incredibly attractive period for forex traders. This overlap creates more volume, liquidity, and volatility, which are ideal conditions for short-term trading strategies. During this time, market participants, ranging from retail traders to large financial institutions, are active, meaning that the best currency pairs are those that involve USD or the European majors.

Now, before we talk about which pairs to trade, let’s first address what makes a currency pair "good" for trading in this session. Volatility is a key factor, but so is liquidity. You want pairs that move quickly but don’t suffer from wide spreads or low liquidity, which can increase your trading costs.

1. EUR/USD – The King of Forex Pairs

There’s no denying that the EUR/USD is the most popular currency pair in the world, and for good reason. It is highly liquid, making it a favorite among day traders and institutions alike. During the New York session, this pair sees heavy trading volume, particularly during the overlap with the London session. The U.S. and European economic calendars also frequently release important data around the same time, causing sharp movements in price. Traders can capitalize on these movements by trading news events or using technical analysis strategies.

• Volatility: Moderate to High
• Best Time to Trade: 8 AM to 12 PM EST (London-New York overlap)
• Key Economic Data: U.S. Non-Farm Payrolls, FOMC statements, ECB meetings

This pair benefits from the strength of two of the world’s largest economies, making it the "go-to" pair during the New York session.

2. GBP/USD – The Cable

If you’re looking for something with a bit more volatility, look no further than the GBP/USD. This pair, often called "The Cable," can have wild swings, especially during the New York-London overlap. The British pound is one of the most actively traded currencies globally, and when paired with the USD, it creates significant opportunities for traders. Because of its inherent volatility, it’s a great pair for those who like to trade breakouts, news, or momentum-based strategies.

• Volatility: High
• Best Time to Trade: 7 AM to 12 PM EST
• Key Economic Data: U.K. GDP reports, Bank of England statements, U.S. interest rate decisions

Be cautious, though—the GBP/USD can be more unpredictable than the EUR/USD due to Brexit concerns, political uncertainties, and economic data that often has outsized effects on the pound.

3. USD/JPY – The Safe-Haven Cross

For traders who like a combination of volatility and predictability, the USD/JPY is another excellent choice. While the yen is considered a "safe-haven" currency and can often trade more predictably during uncertain times, the pair still offers significant volatility, particularly during the New York session. This pair also provides good trading opportunities for those interested in global risk sentiment, as the yen often strengthens in times of uncertainty.

• Volatility: Moderate to High
• Best Time to Trade: 8 AM to 5 PM EST
• Key Economic Data: U.S. Federal Reserve decisions, Japanese economic reports, global risk sentiment

The USD/JPY is a great pair for traders who are looking to capitalize on movements in U.S. interest rates, as the Bank of Japan’s policies often contrast with the Federal Reserve’s approach, leading to divergent monetary policies that can create sharp moves.

4. USD/CAD – The Oil-Driven Pair

The USD/CAD is often referred to as a commodity pair because of Canada’s reliance on oil exports. When oil prices are rising or falling, the Canadian dollar tends to follow suit. Therefore, traders looking to trade the New York session often keep an eye on crude oil prices alongside their USD/CAD charts. This pair is also highly liquid, and because both the U.S. and Canada release key economic data during the New York session, it’s one of the best pairs for trading news events.

• Volatility: Moderate
• Best Time to Trade: 8 AM to 5 PM EST
• Key Economic Data: Canadian employment reports, U.S. crude oil inventories, Bank of Canada meetings

USD/CAD is also a good option for traders who want to diversify away from the typical European-based pairs but still want a currency influenced by a major economy like the U.S.

5. AUD/USD – The Pacific Player

The AUD/USD may seem like an unusual choice for trading during the New York session, but it can provide great opportunities, especially when there is risk-on sentiment in global markets. Australia is a major exporter of commodities, so the AUD/USD pair is often heavily influenced by shifts in risk appetite, commodity prices, and geopolitical events. Though most of the Australian economic data is released during the Asian session, the pair still sees significant movement during the New York trading hours due to USD factors.

• Volatility: Moderate
• Best Time to Trade: 8 AM to 5 PM EST
• Key Economic Data: Australian trade balance reports, U.S. employment data, Chinese economic performance

The AUD/USD can be a nice complement to other more commonly traded pairs, particularly if you’re looking to diversify your exposure to USD-based instruments.

The Role of Economic News in the New York Session

A significant driver of volatility in the New York session is the release of U.S. economic data. Here are some key reports that can create big moves in the forex market:

• Non-Farm Payrolls (NFP): Released on the first Friday of every month, NFP is one of the most closely watched indicators. Big surprises in this report can cause massive spikes in the USD against all other major currencies.

• FOMC Meetings: The Federal Reserve’s decisions on interest rates can lead to significant volatility, especially for USD-based pairs.

• GDP Reports: Both U.S. and European GDP figures can cause sharp moves in currency pairs like EUR/USD, GBP/USD, and USD/JPY.

• Crude Oil Inventories: The release of crude oil data can also impact the USD/CAD, as Canada is a major oil exporter.

Best Strategies for Trading During the New York Session

1. Breakout Trading: This is a common strategy used during the high-volatility periods in the New York session. Traders look for key levels of support and resistance and trade the breakout in either direction.

2. News Trading: Economic releases like NFP or FOMC announcements often lead to big moves in currency pairs. Some traders specifically wait for these events to enter positions, looking to capitalize on the post-news volatility.

3. Scalping: The tight spreads and high liquidity during the New York session make it ideal for scalping strategies. Scalpers look for quick, small profits by entering and exiting trades within minutes.

4. Trend Following: With the influx of volume during the New York session, trends can develop quickly. Some traders use moving averages or other indicators to follow trends during this period.

Risk Management

No matter which pair you choose to trade during the New York session, effective risk management is crucial. The high volatility can lead to significant gains, but it can also cause substantial losses if you're not careful. Always use stop-loss orders, and consider using a fixed percentage of your trading capital for each trade to avoid blowing up your account during volatile periods.

In Conclusion: The New York session offers some of the best opportunities in the forex market, but knowing which currency pairs to focus on is crucial. Whether you’re trading the EUR/USD for its liquidity, the GBP/USD for its volatility, or the USD/CAD for its correlation with oil, each pair has unique characteristics that can be exploited during the New York trading hours.