In plain English
What Cross currency pair means
Crosses are quoted directly between two non-USD currencies. They are distinct from pairs where the U.S. dollar is the base or quote currency. Historically, many crosses were priced by triangulating through USD, though modern electronic markets can quote them directly. The main idea is simply that the pair does not contain USD.
Why it matters
Cross pairs let traders express relative moves between two currencies rather than a view on the U.S. dollar. They can diversify FX exposure, but they may also have different spreads, liquidity, and volatility than USD pairs. Understanding whether a pair is a cross helps explain trading cost and execution behavior.
Example
EUR/JPY is a cross because neither side is the U.S. dollar. If EUR/JPY rises while EUR/USD and USD/JPY move differently, the cross reflects the combined effect of both legs. This is simplified; pricing relationships can shift intraday.
Quick answers
Common questions
Why are crosses important in forex?+
They let market participants trade one non-USD currency against another, which can be useful when the dollar is not the desired exposure.
Are all non-USD pairs crosses?+
Yes. If neither currency is USD, the pair is a cross currency pair.
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