December 1, 2021

Knowing More About Currency Pairs in Trading Forex – Majors, Crosses, Exotics

Trading Forex involves the continuous buying and selling of currencies. Through a broker, currencies are being traded in pairs. These currencies are being quoted based on their relation to the other country. Imagine that these currencies are like doing a tug of war. Each pair is on opposite sides of the rope. There are three kinds of currency pairs:

The Major Currency Pairs – it always has a U.S Dollar on one side.

The Cross Currency Pairs – it does not have a U.S Dollar. Some crosses have one major currency. It is called a Minor currency pair.

The Exotic Currency Pairs – it has one major currency and the other currency is from an emerging market.

Major Currency Pairs

  • EUR/USD – Eurozone/United States – “eurodollar”
  • USD/JPY – the United States/Japan – “dollar-yen”
  • GBP/USD – the United Kingdom/United States – “pound dollar”
  • USD/CHF – United States/Switzerland – “dollar swissy”
  • USD/CAD – United States/Canada – “dollar loonie”
  • AUD/USD – Australia/United States – “aussie dollar”
  • NZD/USD – New Zealand/United States – “kiwi dollar”

The currency pairs mentioned above are known as the major currency pairs. They are the most liquid currencies in the forex market. Liquidity in Forex is based on the total number of active traders.

Minor Currency Pairs/ Cross Currency Pairs

  • EUR/CHF – Eurozone / Switzerland – “euro swissy”
  • EUR/GBP – Eurozone / United Kingdom – “euro pound”
  • EUR/CAD – Eurozone / Canada – “euro loonie”
  • EUR/AUD – Eurozone / Australia – “euro aussie”
  • EUR/NZD – Eurozone / New Zealand – “euro kiwi”
  • EUR/SEK – Eurozone / Sweden – “euro stockie”
  • EUR/NOK – Eurozone / Norway – “euro nockie”

These pairs are also known as Major Cross-Currency Pairs. Those pairs that don’t have U.S dollar (USD) are called cross-currency pairs or just “crosses”. There are also major crosses and they are called “minors”. Although they are not a liquid as the majors, these pairs are also pretty liquid and provide good trading opportunities.

Euro Crosses

  • EUR/CHF – Eurozone / Switzerland
  • EUR/GBP – Eurozone / United Kingdom
  • EUR/CAD – Eurozone / Canada
  • EUR/AUD – Eurozone / Australia
  • EUR/NZD – Eurozone / New Zealand
  • EUR/SEK – Eurozone / Sweden
  • EUR/NOK – Eurozone / Norway

Yen Crosses

  • EUR/JPY – Eurozone / Japan
  • GBP/JPY – United Kingdom / Japan
  • CHF/JPY – Switzerland / Japan
  • CAD/JPY – Canada / Japan
  • AUD/JPY – Australia / Japan
  • NZD/JPY – New Zealand / Japan

Pound Crosses

  • GBP/CHF – United Kingdom / Switzerland
  • GBP/AUD – United Kingdom / Australia
  • GBP/CAD – United Kingdom / Canada
  • GBP/NZD – United Kingdom / New Zealand

Exotic Currency Pairs

  • USD/BRL – United States / Brazil
  • USD/HKD – United States / Hong Kong
  • USD/SAR – United States / Saudi Arabia
  • USD/SGD – United States / Singapore
  • USD/ZAR – United States / South Africa
  • USD/THB – United States / Thailand
  • USD/MXN – United States / Mexico
  • USD/RUB – United States / Russia
  • USD/PLN – United States / Poland
  • USD/CLP – United States/ Chile

The currency pairs above are known as exotic pairs. They are made up of a major currency and the other is from an emerging economy such as Mexico, Brazil, Hungary, Chile, and Turkey. Remember that these currencies are not traded regularly such as the major pairs and the crosses. Therefore, the transaction cost of trading Forexthese pairs is a lot higher compared to the previous two.