Cross Pairs

Currency pairs that don't include the US dollar — also called "minor pairs" — such as EUR/GBP, EUR/JPY, and GBP/JPY.

Cross pairs, or simply "crosses," are formed from two major currencies that don't involve USD. Common examples include EUR/GBP, EUR/JPY, EUR/CHF, GBP/JPY, AUD/JPY, and CAD/JPY. While spreads are wider and liquidity thinner than in USD pairs, crosses have grown significantly in volume as institutional traders seek direct exposure to non-dollar currency relationships.

Crosses are useful when you have a view on the relative strength of two currencies but want to avoid taking on dollar risk as a third variable. If you believe the ECB will tighten while the Bank of Japan holds rates near zero, trading EUR/JPY long is a cleaner expression of that thesis than running two separate USD pairs simultaneously.

JPY crosses — particularly GBP/JPY, nicknamed "the beast" — are known for extreme volatility. GBP/JPY can move 200+ pips on active days because two already-volatile currencies compound their movements. The sterling's sensitivity to UK political events and the yen's sensitivity to Bank of Japan intervention risk make this pair among the most unforgiving in the market for under-sized stops.

This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.