Minor Currency Pairs Definition: Minor currency pairs, also called crosses, are forex pairs that combine two major currencies without the US dollar, such as EUR/GBP, EUR/JPY or GBP/JPY. Their price is often derived from each currency’s dollar rate, so a cross reflects the relative strength of two economies with the dollar’s own moves stripped out.
What Are Minor Currency Pairs?
For decades, a bank in Frankfurt that wanted Japanese yen often found it cheaper to buy dollars first and then sell those dollars for yen. The dollar was the hub of the system, and most other exchanges went through it. Crosses grew out of the demand to skip that middle step and trade two non-dollar currencies directly.
Today a currency pair counts as a minor when both of its currencies belong to the major group (the euro, yen, pound, Swiss franc, Canadian, Australian and New Zealand dollars) but the US dollar is absent. That gives a few dozen possible combinations. A handful attract most of the volume: EUR/GBP, EUR/JPY, GBP/JPY, EUR/CHF, AUD/JPY and EUR/AUD.
Crosses sit between the seven major currency pairs and the exotics. They are liquid enough for most retail strategies, yet thinner than EUR/USD, and each has a personality set by the two economies inside it.
How Do Minor Currency Pairs Work?
Once you know what a cross is, the practical question is where its price comes from. In the interbank market, many crosses are priced from two dollar legs. The rate for EUR/JPY equals EUR/USD multiplied by USD/JPY, because buying euros with yen is the same as buying dollars with yen and then euros with dollars.
Say EUR/USD trades at 1.1000 and USD/JPY at 150.00. The implied EUR/JPY rate is 1.1000 × 150.00 = 165.00. If a dealer quoted EUR/JPY at 166.00, a bank could buy euros through the two dollar legs at 165 and sell them directly at 166, pocketing the gap. That arbitrage keeps quoted crosses glued to their synthetic value within a fraction of a pip.
Now suppose the dollar rallies 2% against everything. EUR/USD drops to about 1.0780 and USD/JPY climbs to 153.00. Multiply the two and EUR/JPY lands at roughly 164.9, almost unchanged, because the dollar move cancels out on both legs. This is the core mechanic of a cross: it moves only when the euro and the yen diverge from each other.
Pip values follow the quote currency. One standard lot of EUR/GBP earns or loses £10 per pip, while one lot of EUR/JPY earns or loses ¥1,000 per pip. A trader with a dollar account sees those amounts converted at the prevailing GBP/USD or USD/JPY rate, so the dollar value of a pip drifts over time.
Types of Minor Currency Pairs
Traders usually group crosses by the currency they are built around.
- Euro crosses: EUR/GBP, EUR/JPY, EUR/CHF, EUR/AUD, EUR/CAD. EUR/GBP is the calmest of them, because the eurozone and UK economies are closely linked.
- Yen crosses: EUR/JPY, GBP/JPY, AUD/JPY, CAD/JPY. They react strongly to global risk mood, because the yen tends to rise when investors get nervous.
- Sterling crosses: GBP/JPY, GBP/CHF, GBP/AUD. They carry UK political and data risk into each pairing.
- Commodity crosses: AUD/NZD, AUD/CAD, NZD/CAD. They pit resource exporters against each other, so shared commodity cycles often cancel out.
Minor Currency Pairs vs. Major Currency Pairs
| Minor pairs (crosses) | Major pairs | |
|---|---|---|
| US dollar | Not included | On one side of every pair |
| Examples | EUR/GBP, EUR/JPY, GBP/JPY | EUR/USD, USD/JPY, GBP/USD |
| Spread | Wider, often 2–4 times a major | Tightest in the market |
| Main driver | Gap between two non-US economies | US data and Fed policy plus the other economy |
| Correlation with the dollar | Low, the dollar cancels out | High across all seven |
Why Are Minor Currency Pairs Important for Traders?
Crosses let you express a view on two economies without taking a dollar bet. If you expect the Bank of England to hike while the ECB holds, buying GBP/USD also exposes you to whatever the Fed does. Selling EUR/GBP isolates the UK-versus-eurozone story, which is the trade you actually wanted.
That precision comes at a price. A cross built from two dollar legs inherits the bid-ask spread of both, so a spread of 1 pip on EUR/USD can become 2–3 pips on EUR/GBP and more on GBP/NZD. For a scalper opening dozens of trades a day, that difference can eat most of the edge.
Some crosses also move far more than their components suggest. After the Brexit vote on 24 June 2016, GBP/JPY fell from above 160 to near 133 within hours, because the pound collapsed while the yen surged as a safe haven. Both legs moved against a long position at once, and the drop in the cross was larger than in GBP/USD. Wider swings mean a stop placed at a sensible distance on a major can be far too tight on a yen cross.
Liquidity is uneven across the day as well. EUR/GBP is deepest during European hours, while AUD/JPY trades most actively during the Asian session. Outside those windows, spreads on the thinner crosses widen and fills get worse.
Key Takeaways
- A minor currency pair, or cross, combines two major currencies without the US dollar, such as EUR/GBP or GBP/JPY.
- Many crosses are priced synthetically from two dollar pairs, and arbitrage keeps the quoted rate aligned with that product.
- A broad dollar move cancels out inside a cross, so the pair moves only when its two currencies diverge.
- Crosses cost more to trade than majors because their spreads reflect two underlying markets.
- Yen and sterling crosses can swing much harder than their components when both legs move against each other.
Are minor currency pairs good for beginners?
The liquid crosses such as EUR/GBP and EUR/JPY are manageable, but they cost more to trade than EUR/USD and some, like GBP/JPY, swing far more per day. Most beginners learn the majors first and add one cross once they understand both economies behind it.
Is EUR/GBP a major or a minor pair?
Under the standard definition it is a minor, because it does not include the US dollar. It is still one of the most traded crosses, so a few brokers list it alongside the majors.
Why is GBP/JPY so volatile?
It combines a currency sensitive to UK data and politics with one that swings on global risk mood and Japanese rate policy. When both move at once in opposite directions, the cross moves by the sum of the two.
What is the difference between a minor pair and an exotic pair?
A minor pairs two major currencies, such as the euro and the yen. An exotic pairs a major with the currency of a smaller or emerging economy, such as the Turkish lira or the South African rand, and usually costs much more to trade.
