What are Cross Currency Pairs? - What are Minor Currency Pairs?

Currency Crosses

Cross pairs trade currencies without the US dollar in the mix.

Example:

EUR JPY
GBPJPY
EUR GBP
AUDJPY
GBPCHF
EUR CHF
CHFJPY

To buy EURJPY you first buy EURUSD and then buy USD JPY.

This means to buy EURJPY you will have traded and transacted 2 other major currency pairs. This is why the majors have big turnover volumes because all minor currency pairs will involve these 2 majors.

This is because in the market you can not buy or sell the EUR directly for the JPY you have to convert EUR in to USD then using the USD you have to buy JPY. This is why these are called currency crosses because of the cross trade transactions using USD. This also is why USD takes up 85% of all trade transactions, because it is the base currency of all exchange transactions.

To buy GBPJPY you first buy GBPUSD and then buy USDJPY

Cross-currency pairs often have higher spreads than major pairs because each trade involves handling two transactions simultaneously during buying or selling.

Currency crosses are generally less liquid and, consequently, are traded less frequently by the majority of operators: this reduced trading activity often leads to less predictable price movements due to their comparatively low transaction turnover volumes.

Daily Trade Transactions Turnover of Currencies by Volumes

The USD is the most transacted, followed by EUR, GBP, JPY and CHF, the daily trade turnover volume share taken by each of these 5 in terms of percentage is displayed:

Major Forex Pairs

USD - 85%

EUR - 40 %

JPY - 20%

GBP - 13 %

CHF - 9%

Since transactions are in pairs the total will be 200 %

For example the EUR/USD pair: EURUSD = 100 percent EUR + 100 % USD

Summing up the total of the large 4 pairs = 85 + 40 + 20 + 13 + 9 = 167 % . Note these 4 are made up of 5 individual currencies which make up the sum total of 167%. This percent of the total turnover volume is what makes these 4 currency pairs to be referred to & known as major currency pairs or in short "majors". This lion share of the total turnover daily volume is also what makes these 4 the best currency pairs to trade especially among the Day Traders.

Therefore volume for Major currency pairs and Minor currency cross pairs is:

Major Forex Pairs Cover 167% of Total Market Turnover.

Other Minor Currency Pairs collectively constitute 33% of the total transaction turnover within the entire market movements.

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