Key Talking Points for New Traders
- Foreign exchange rates are always quoted in currency pairs
- Major pairs combine a major currency with the US Dollar (USD)
- Currency cross pairs combine major currencies without involving the USD
In the Forex market, every exchange rate is quoted using two currencies combined into a single instrument known as a currency pair. These pairs are primarily built around the G8 currencies, which include the US Dollar (USD), Euro (EUR), British Pound (GBP), Japanese Yen (JPY), Australian Dollar (AUD), Canadian Dollar (CAD), Swiss Franc (CHF), and New Zealand Dollar (NZD).
From these currencies, the market broadly categorizes pairs into Major Pairs and Cross Pairs. In this article, we will focus specifically on understanding currency crosses, why they exist, and why many traders actively seek opportunities beyond the majors.
Understanding Currency Cross Pairs in the Forex Market
| Symbol | Country | Currency | Nickname |
| AUD | Australia | Dollar | Aussie |
| CAD | Canada | Dollar | Loonie |
| CHF | Switzerland | Franc | Swissy |
| EUR | Eurozone | Euro | Euro |
| GBP | Great Britain | Pound | Cable |
| JPY | Japan | Yen | Yen |
| NZD | New Zealand | Dollar | Kiwi |
| USD | United States | Dollar | Buck |
What Is a Currency Cross Pair?
A Major Pair is defined as any currency pair that includes the US Dollar, such as EUR/USD, GBP/USD, or USD/JPY. These pairs tend to have the highest liquidity and the tightest spreads due to the dominant role of the USD in global finance.
A currency cross pair, on the other hand, is any pair that does not include the US Dollar. Examples include EUR/AUD, EUR/GBP, EUR/JPY, and GBP/JPY.
Currency crosses were originally created to simplify international transactions. Instead of converting one currency into USD and then into another currency, market participants could exchange currencies directly. This innovation not only streamlined global trade but also introduced new trading opportunities in the Forex market.
Why Traders Use Currency Cross Pairs
Trading Without USD Volatility
One of the primary advantages of trading currency crosses is the ability to avoid direct exposure to USD-driven volatility. Since the US Dollar is heavily influenced by Federal Reserve policy, US economic data, and global risk sentiment, major pairs can experience sharp and unpredictable moves.
By trading cross pairs, traders can focus more purely on the relative strength and weakness between two non-USD economies, such as the Eurozone versus Australia or the United Kingdom versus Japan.
Strong Trending Characteristics of Cross Pairs
Another major benefit of currency cross pairs is their tendency to produce strong and sustained trends. Because cross pairs reflect the interaction between two independent economic systems, they can move significantly when one economy clearly outperforms the other.
A powerful example of this is the EUR/AUD currency cross.
EURAUD Case Study: A High-Volatility Cross Pair
During the 2013 trading year, the EURAUD moved approximately 3,378 pips from low to high. This level of movement highlights the strong trending potential often found in cross pairs.
To put this into perspective, the EUR/USD, one of the most heavily traded major pairs in the world, moved only about 848 pips over the same period. That means EURAUD moved nearly four times as much as EUR/USD during that year.
This difference in volatility and range is one of the main reasons many professional traders actively monitor currency crosses for breakout, trend-following, and swing-trading strategies.
Popular Euro Currency Crosses to Watch
Beyond EURAUD, there are several Euro-based currency cross pairs that are actively traded by both retail and professional traders. These pairs are favored not only because of their relatively good liquidity, but also because they often display clean technical structures, well-defined trends, and price behavior that is easier to analyze compared to many USD-based pairs.
Each Euro cross represents a distinct macroeconomic relationship between the Eurozone and another major economy. Understanding these relationships helps traders better interpret price movement and align technical setups with broader market themes.
EUR/GBP – Trading the Eurozone vs United Kingdom Relationship
The EUR/GBP pair reflects the economic and monetary relationship between the Eurozone and the United Kingdom, two regions with deep financial ties and frequent policy divergence. Because both currencies are heavily influenced by central bank decisions from the European Central Bank (ECB) and the Bank of England (BoE), this pair often reacts strongly to interest rate expectations, inflation data, and political developments.
From a technical perspective, EUR/GBP is well known for forming orderly trends and ranges, making it suitable for range trading, breakout strategies, and trend-following approaches. Volatility tends to be more controlled compared to pairs like GBP/JPY, which can make EUR/GBP appealing for traders who prefer measured price movement and tighter risk parameters.
EUR/JPY – A Volatile Cross Driven by Risk Sentiment
EUR/JPY combines the Euro with the Japanese Yen, a currency widely regarded as a global safe-haven. As a result, this pair is highly sensitive to changes in risk sentiment, global equity markets, and shifts in monetary policy from both the ECB and the Bank of Japan (BoJ).
When market confidence is strong and risk appetite is high, EUR/JPY often trends aggressively. Conversely, during periods of market stress or uncertainty, Yen strength can lead to sharp reversals. This behavior makes EUR/JPY particularly attractive for trend traders and breakout traders, but it also requires disciplined risk management due to its ability to move quickly.
EUR/AUD – High Volatility and Strong Trend Potential
The EUR/AUD cross is one of the most popular Euro crosses among trend traders. It pairs the Eurozone economy with Australia, whose currency is heavily influenced by commodity prices, Chinese economic data, and Reserve Bank of Australia (RBA) policy decisions.
Because the Euro and the Australian Dollar respond to very different economic drivers, EUR/AUD often produces extended multi-week or multi-month trends. This makes it well-suited for swing trading, position trading, and indicator-based trend strategies. Traders should be aware, however, that this strong trending behavior is often accompanied by wider daily ranges and larger stop requirements.
EUR/CHF – Stability and Defensive Market Behavior
EUR/CHF reflects the relationship between the Eurozone and Switzerland, a country known for its financial stability and the Swiss Franc’s role as a defensive currency. This pair is heavily influenced by policies from the Swiss National Bank (SNB), particularly when excessive Franc strength threatens export competitiveness.
Technically, EUR/CHF is often characterized by slower, more deliberate price movement and extended periods of consolidation. While it may not offer the explosive volatility seen in other Euro crosses, it can be attractive for traders who prefer lower volatility environments, longer-term positioning, and clearer support and resistance levels.
Choosing the Right Euro Cross for Your Trading Style
Each Euro-based currency cross behaves differently, and there is no single “best” pair. Instead, traders should choose a pair that aligns with their:
- Risk tolerance
- Preferred trading time frame
- Strategy type (trend, breakout, range, or swing trading)
By understanding the macroeconomic drivers and technical characteristics of each Euro cross, traders can expand their opportunity set beyond the major pairs and trade with greater clarity and confidence.
Final Thoughts for Beginner Forex Traders
When many traders first open a trading platform, they focus almost exclusively on the major currency pairs. While majors are important, they are not the only place where opportunity exists.
Currency cross pairs offer:
- Reduced dependence on USD-driven moves
- Stronger and more sustained trends
- Expanded diversification across global economies
As you continue developing your Forex trading skills, remember to look beyond the majors. Exploring currency crosses can open the door to new setups, clearer trends, and opportunities that many traders overlook.
