In forex, the term ‘currency crosses’ simply refers to currency pairs that do not include the US dollar. However, since the US dollar is considered one of the strongest and most popular currencies, it is highly traded across the world. Thus, currency crosses have a higher potential of making profits than popular currency pairs involving the US dollar, such as EUR/USD, GBP/USD, USD/JPY, and AUD/USD.
Major Currency Crosses in Forex
The forex market is driven by the economic stability of nations, which translates into the value of their respective currencies. Since the US is considered to be the economic king of the world, it enjoys the highest value. However, the euro and the yen are also regarded as strong, and many nations hold these currencies for foreign exchange reserves. Taking this fact into account, some of the major currency crosses are:
Some of the minor crosses are:
Trading in currency crosses is often riskier and more complicated than trading in major currency pairs. Being traded by a lower number of traders, you can face liquidity problems. In addition, as these currency crosses belong to relatively weaker economies, trading also becomes more volatile.
Relative Advantage with Currency Crosses
One of the advantages of analyzing currency crosses is making an informed decision when exposed to a weak US dollar. For example, suppose you predict a weak dollar and want to buy either EUR/USD or JPY/USD. How would you make a choice? In such a situation, analyzing the trends in EUR/JPY will help you make the right choice. If the cross currency is surging up, it means that the EUR is stronger. Thus, buying EUR/USD will be a better option.
Since the finish of the highest quality level and the increment of exchanging at a wholesale level, cross currency exchanges are essential for consistently trading life. Not exclusively cross currency exchanges make it simpler for global payment, however they have additionally made them extraordinarily less expensive.