Market StructureCrossesMinors
Minor Pairs
Pairs made up of two major currencies but excluding the US dollar, such as EUR/GBP, EUR/JPY or AUD/NZD.
What Minor Pairs means
Minor pairs, usually called crosses, combine two heavily traded currencies without involving the US dollar. Common examples include EUR/GBP, EUR/JPY, GBP/JPY, EUR/CHF, AUD/JPY and AUD/NZD. Historically these rates were derived from the two dollar legs, and many are still priced that way internally, though the most active crosses now have genuine direct liquidity of their own. Turnover is lower than in the majors, so spreads are typically wider and depth thinner, particularly outside the relevant regional sessions.
Crosses are useful for expressing a view on the relative strength of two non-dollar currencies without dollar exposure contaminating the trade. They also tend to be more volatile: GBP/JPY, for example, effectively stacks sterling risk on top of yen risk and routinely posts daily ranges several times larger than EUR/GBP. Traders should size positions off the pair's own average range rather than reusing a stop distance carried over from a major.
Worked example
If EUR/USD trades at 1.0850 and GBP/USD at 1.2700, the implied EUR/GBP cross rate is 1.0850 divided by 1.2700, or about 0.8543.
Related terms
- Major PairsThe most heavily traded currency pairs, each pairing the US dollar with another large developed-market currency.
- Cross RateAn exchange rate between two currencies derived from, or quoted without reference to, the US dollar.
- Exotic PairsPairs combining a major currency with an emerging or thinly traded currency, such as USD/TRY or USD/ZAR.
- Currency PairTwo currencies quoted against each other, expressing how much of the second currency one unit of the first is worth.
- VolatilityThe magnitude of price fluctuation over a period, usually measured as the standard deviation of returns or as an average range.
Frequently asked questions
What does Minor Pairs mean in forex trading?
Pairs made up of two major currencies but excluding the US dollar, such as EUR/GBP, EUR/JPY or AUD/NZD.
How does Minor Pairs work in practice?
Crosses are useful for expressing a view on the relative strength of two non-dollar currencies without dollar exposure contaminating the trade. They also tend to be more volatile: GBP/JPY, for example, effectively stacks sterling risk on top of yen risk and routinely posts daily ranges several times larger than EUR/GBP. Traders should size positions off the pair's own average range rather than reusing a stop distance carried over from a major.
What is an example of Minor Pairs?
If EUR/USD trades at 1.0850 and GBP/USD at 1.2700, the implied EUR/GBP cross rate is 1.0850 divided by 1.2700, or about 0.8543.
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