In the dynamic world of forex trading, 2025 is proving to be a year defined by geopolitical turbulence. From escalating trade wars and de-dollarization efforts by BRICS nations to ongoing conflicts in the Middle East and Ukraine, global events are injecting unprecedented volatility into currency markets. As traders seek the best forex currency pairs to trade in 2025, understanding these geopolitical undercurrents is crucial for spotting opportunities and managing risks. This guide explores top forex currency pairs, highlighting how world events could influence their movements, with actionable insights for beginners and pros alike.
Whether you’re focusing on major pairs for liquidity or exotics for high-reward setups, geopolitics acts as a catalyst—driving safe-haven flows, commodity price swings, and policy shifts. According to market analysts, factors like U.S. tariffs, elections, and regional conflicts are already weakening the USD, potentially boosting pairs tied to emerging economies. Let’s dive into the best forex currency pairs to trade in 2025, ranked by liquidity and geopolitical relevance.
EUR/USD
The Euro-Dollar Powerhouse Amid Transatlantic Tensions.
The EUR/USD remains the most traded forex currency pair globally, accounting for about 23% of daily volume, thanks to its tight spreads and high liquidity.investopedia.com In 2025, geopolitical events like U.S. tariffs on European goods and the ongoing Russia-Ukraine war are key drivers. The conflict has disrupted energy supplies to Europe, pressuring the euro, while U.S. policy shifts under potential tariff escalations could weaken the dollar further.
Russia-Ukraine War and EU Sanctions:
The prolonged conflict, now in its fourth year as of July 2025, has led to sustained EU sanctions on Russia, extended for another six months in June 2025, causing energy import disruptions and higher inflation across the Eurozone—potentially shaving 1-2% off EU GDP. This has weakened the euro through elevated costs for natural gas and commodities, but a potential ceasefire or peace negotiations—speculated amid reports of backchannel talks—could alleviate supply chain pressures and strengthen the EUR by reducing inflation to below 2%. Additionally, the war has prompted a reevaluation of Europe’s defense posture, with increased military spending straining budgets but fostering long-term economic resilience.
BRICS De-Dollarization Efforts:
BRICS nations (now expanded) are accelerating de-dollarization, with intra-BRICS trade in USD dropping to about one-third of previous levels by mid-2025, pushing more transactions toward euros and local currencies like the yuan. This shift, driven by U.S. sanctions and geopolitical fragmentation, could bolster the euro as a viable alternative reserve currency, especially in energy and commodity trades, potentially appreciating EUR/USD by 5-10% if adoption grows. However, challenges remain, as BRICS currencies lack the liquidity and stability of the USD or EUR.
U.S.-EU Trade Tensions:
Recent U.S. tariff threats, including a potential 30% levy on EU imports announced in July 2025, have already caused EUR/USD to gap lower, exacerbating transatlantic frictions amid broader U.S. isolationism. This could lead to retaliatory measures from the EU, further pressuring the dollar but risking a broader trade war that hurts global growth and indirectly weakens the euro through reduced exports.
Look for volatility around ECB meetings or U.S. election-related news. Volatility has spiked 300% during past tariff wars
Watch out for the G20 summit in South Africa, where U.S. absence might amplify China-Russia influence, potentially hurting USD strength.
USD/JPY
Safe-Haven Yen in a Volatile World
As a classic safe-haven pair, USD/JPY is ideal for traders eyeing forex currency pairs influenced by global risk sentiment. Japan’s low-interest-rate policy contrasts with U.S. Fed moves, but 2025’s geopolitical risks—like North Korea tensions and U.S.-China trade wars—could drive yen appreciation as investors flee to safety. With the USD down 9% from its 2025 peak, this pair offers massive profit potential during Asian session volatility.
Indo-Pacific Flashpoints (Taiwan and South China Sea):
Escalating tensions in the Taiwan Strait and South China Sea, highlighted by China’s warnings to the U.S. against “playing with fire” in June 2025 and increased military activities, are fueling risk-off sentiment and safe-haven demand for the yen. Beijing’s assertions of legal claims over Taiwan, coupled with U.S. defense commitments, raise the specter of conflict, potentially disrupting global supply chains and boosting JPY by 5-10% in flight-to-safety moves. In the South China Sea, ongoing disputes with the Philippines and Japan have led to a strategic triangle alliance, amplifying regional instability and yen strength as a hedge against broader U.S.-China confrontations.
U.S.-China Trade War and Tariffs:
Trump’s tariffs, including 25% on Japanese goods and up to 104% on Chinese imports as of July 2025, are fragmenting regional trade, indirectly benefiting the yen as Japan’s export-dependent economy faces headwinds but attracts capital inflows during uncertainty.This has caused USD/JPY to ease from 147.50 levels recently, with potential for further yen gains if tariffs escalate, leading to a 15-20% drop in U.S.-China trade volumes and heightened global aversion.fxstreet.comforex.com Japan’s vulnerability to Middle East spillovers, combined with BOJ’s cautious policy, amplifies these effects.
Broader Regional Risks:
North Korea’s provocations and alliances with Russia add layers of uncertainty, while the overall Indo-Pacific tumult—exacerbated by U.S. tariff pauses and diplomatic breakdowns—could sustain yen appreciation amid safe-haven flows, though a de-escalation in U.S.-China talks might reverse this.
Best for swing trading; watch for breakouts above 150 or dips below 140 amid U.S. dollar weakness
Watch out for the potential escalations in North-South Korea conflicts, as forecasted by experts, which could spike yen demand