Overview
In FX, many of the most actively traded pairs include USD, such as EUR/USD or USD/JPY. A cross currency pair, often called a cross, is simply a pair where USD is not one of the currencies.
Crosses are useful because they allow you to express a view on the relationship between two economies or two central banks without the USD being the direct driver. They can also be helpful when USD is dominant across markets and you want to isolate non-USD themes.
What it means in practice
Crosses are often driven by differences in rates, growth expectations, and central bank guidance between the two currencies involved. They can also be influenced by regional risk sentiment and local data surprises.
Because crosses do not include USD, their behaviour can sometimes be explained as the difference between two USD pairs. For example, EUR/GBP is influenced by what EUR is doing broadly and what GBP is doing broadly. This is where relative strength analysis can be helpful.
Why it matters in live markets
Crosses can behave differently from major USD pairs, especially when USD moves sharply. In periods of broad USD strength or weakness, crosses may show cleaner moves that reflect local drivers rather than the USD theme.
Crosses can also have different liquidity characteristics. Some crosses are very liquid, while others can have wider spreads and more sensitivity to event windows. Execution conditions can vary by session and by the currencies involved.
Key points
- A cross currency pair does not include USD.
- Crosses help isolate relative moves between two non-USD currencies.
- Drivers often include rate differentials and central bank divergence.
- Liquidity and spreads can vary more across crosses than majors.
Example
If EUR is strengthening and GBP is weakening on a relative basis, EUR/GBP may trend higher even if EUR/USD is flat because USD is dominating the majors. In that case, the cross can express the relative difference more clearly than a USD pair.
Related glossary terms
Currency Pair, Forex, Relative Strength, Base Currency, Quote Currency, USD Strength, Liquidity, Spreads