Minor Currency Pairs
Minor currency pairs let traders compare two widely traded currencies without including the US dollar. EUR/GBP, EUR/JPY and GBP/JPY are familiar examples. They are commonly called currency crosses, although “cross” is a broader term than “minor.” IG’s explanation of forex pair categories describes this distinction and notes that classification can vary.
The practical appeal is straightforward: a trader expecting the euro to outperform sterling can express that view through EUR/GBP rather than taking a separate position against the dollar. The practical challenge is deciding whether the pair’s trading costs, price movements and event risks suit the trade. Minor is a label, not a promise of minor losses.
What Counts as a Minor Currency Pair?
In the usual retail trading classification, minor pairs combine currencies such as the euro, British pound, Japanese yen, Swiss franc, Australian dollar, Canadian dollar and New Zealand dollar. Neither side is USD. The table below groups common examples, with each pair appearing once. These symbols also appear in MetaTrader’s minor currency listings.
| Group | Currency pairs |
|---|---|
| Euro crosses | EUR/GBP, EUR/JPY, EUR/CHF, EUR/AUD, EUR/CAD, EUR/NZD |
| Sterling crosses, excluding EUR/GBP | GBP/JPY, GBP/CHF, GBP/AUD, GBP/CAD, GBP/NZD |
| Australian dollar crosses, excluding those above | AUD/JPY, AUD/CHF, AUD/CAD, AUD/NZD |
| New Zealand dollar crosses, excluding those above | NZD/JPY, NZD/CHF, NZD/CAD |
| Remaining Canadian dollar and Swiss franc crosses | CAD/JPY, CAD/CHF, CHF/JPY |
Under this convention, major currency pairs contain USD alongside another widely traded currency. Minors should not be confused with exotic currency pairs, which generally involve a less widely traded currency. A pair does not become a minor simply because USD is absent: GBP/HUF, for example, is classified as exotic in IG’s guide.
Treat these categories as useful shorthand rather than universal rules. The broader guide to forex currency pairs explains how the base and quote currencies determine what a position represents.
Why Trade a Cross Instead of a Dollar Pair?
A minor pair can express a relative view more directly. Suppose your analysis favors the euro over sterling, but you have no strong opinion about the dollar. Buying EUR/USD introduces a euro versus dollar position, which is not the same trade as buying EUR/GBP.
Cross rates remain mathematically connected to dollar exchange rates. The Reserve Bank of Australia’s explanation of cross rates shows how an exchange rate between two currencies can be calculated using their rates against a third currency.
For EUR/GBP, the relationship is:
EUR/GBP = EUR/USD ÷ GBP/USD
Using hypothetical rates, EUR/USD at 1.1000 and GBP/USD at 1.2500 imply EUR/GBP at 0.8800. If both dollar pairs rise by exactly the same percentage, that ratio stays unchanged. If the euro rises faster than sterling against USD, EUR/GBP rises.
This also explains why “both currencies are strong” is not enough analysis. A EUR/GBP buyer needs the euro to outperform the pound, not simply to strengthen against some other currency. Both currencies could fall against USD while EUR/GBP rises, provided sterling falls further.
The calculation is a reference relationship, not an executable trading quote. For a proposed trade, compare the actual bid and ask offered for the cross rather than assuming that a rate calculated from two displayed prices is available to trade.
What Moves Minor Currency Pairs?
Start with the difference between the two economies, rather than reading news about just one. For EUR/GBP, compare euro area developments with UK developments. For AUD/NZD, compare Australia with New Zealand. A favorable report on one side matters less if the other side receives an even stronger surprise.
Interest rate expectations are one part of that comparison. The RBA’s research on drivers of the Australian dollar explains how relative interest rates, capital flows, commodity prices and investor risk preferences influence exchange rates. Applied to AUD/JPY, this means reviewing Australian conditions alongside Japanese conditions, not treating the Australian dollar as an isolated trade.
For an AUD/NZD research process, compare the expected policy paths of the Reserve Bank of Australia and the Reserve Bank of New Zealand. For EUR/GBP, compare the European Central Bank and Bank of England. The useful question is whether the outlook is changing relative to what traders already expected.
Economic announcements need the same treatment. RBA research into market responses to economic data examines the surprise component of releases and shows why exchange rate reactions cannot be reduced to a simple interest rate formula. Strong reported growth does not automatically produce a stronger currency.
Policy changes can also invalidate a familiar trading pattern. On January 15, 2015, the Swiss National Bank discontinued its minimum exchange rate of CHF 1.20 per euro. The lesson for EUR/CHF analysis is not to predict a repeat. It is to avoid treating an existing policy arrangement as permanent.
Spreads, Financing and the Cost of Trading Minors
Assess the pair you intend to trade, not the category average. Record its spread during your trading hours and compare that cost with the size of the movement your strategy targets. A pair can produce an attractive chart setup and still be expensive for a short trade.
Advertised minimum spreads are not a reliable trading budget. OANDA’s spread and margin disclosures explain that spreads can widen around market openings and closings, news announcements and periods of uncertainty. This is especially relevant when a strategy depends on entering or exiting close to a scheduled release.
Consider a hypothetical three pip spread against a planned 15 pip gross price movement. The spread alone equals 20% of that movement before any commission or other charges. Against a 100 pip movement, the same spread represents 3%. Neither calculation proves that a trade is worthwhile, but it makes the cost burden visible.
For positions held overnight, inspect the financing rate for the direction you intend to trade. Buying and selling the same pair can produce different charges. OANDA’s financing methodology, for example, incorporates underlying swap rates and an administrative adjustment; its published funding rates can change daily.
Do not assume that buying the currency with the higher central bank rate guarantees an overnight credit. Use the broker’s actual schedule, including any weekend or holiday adjustments. The separate guide to forex swaps and overnight charges covers those calculations in more detail.
When Should You Watch Minor Pairs?
There is no single best trading window for every cross. BIS research on foreign exchange market structure identifies the London open and the London–New York overlap as periods when currency market liquidity is typically highest. That is a useful starting point, not a guarantee about every pair or trading day.
For a practical observation schedule, begin with London hours for EUR/GBP. Include the Asia Pacific session when studying AUD/NZD, and examine both Asian and European activity for yen crosses. Record what actually happens on your broker’s feed rather than relying on a session label.
Keep two records: one for routine conditions and another for announcement periods. Compare spreads, price ranges and execution during each. A strategy that appears workable on an ordinary morning may behave differently during a policy decision.
Use the forex market hours guide to organize the schedule, then confirm release times in your own time zone.
A Minor Pair Trade Example: EUR/GBP
The following numbers are hypothetical and are not current market quotes. Assume a trader buys 10,000 euros through EUR/GBP at an executed ask price of 0.8500, then closes the position at an executed bid price of 0.8540.
Trading profit in GBP = 10,000 × (0.8540 − 0.8500) = £40
The move is 40 pips. On this position, each pip is worth £1 because 10,000 × 0.0001 equals 1. For these conventional forex quotes, a pip is generally 0.0001; when the quote currency is JPY, it is generally 0.01, as explained in OANDA’s guide to pip measurement.
If the trading account is denominated in USD and the applicable GBP/USD conversion rate is 1.2500, that £40 converts to $50 before any separate commission, financing or conversion charge. Because the example uses executed ask and bid prices, the spread is already reflected in the price difference. It should not be deducted again.
A closing bid of 0.8460 instead would produce a £40 trading loss before those separate charges. The arithmetic works in both directions.
This example exposes a common sizing mistake: a pip on a minor pair is not automatically worth a fixed number of US dollars. Its account currency value depends on the position size, quote currency and conversion rate. Check pip values before placing the order, particularly when switching between sterling, franc and yen quotes.
Managing Risk Across Several Minor Pairs
Position size should follow the planned cash risk, not the amount of margin available. In the EUR/GBP example, a stop 30 pips below the entry would represent £30 of price risk on 10,000 euros, assuming execution at the intended level. At the hypothetical conversion rate above, that equals $37.50 before charges.
The execution assumption matters. OANDA’s volatility guidance states that ordinary stop loss orders are not guaranteed to fill at the requested price. A price gap or rapid movement can make the actual loss larger. Allow for that possibility rather than treating a stop as insurance.
Also check shared currency exposure. Buying EUR/JPY, GBP/JPY and AUD/JPY creates three positions that are all short yen. They have different base currencies, but a yen rally creates a common adverse influence. Three symbols do not necessarily mean three independent risks.
A useful review is to list the currencies bought and sold across every open trade. Then ask what happens if one currency strengthens sharply. Use forex position sizing to turn that review into cash amounts rather than counting trades.
Finally, the educational label “minor” does not determine a US account’s margin requirement. NFA’s forex security deposit rules specify requirements by currency and permit increases under extraordinary conditions. Check the dealer’s applicable requirement instead of inferring it from the pair’s category.
Choosing a Minor Pair to Study
Build a short research list rather than opening every available cross. A workable selection process is to:
- Choose a pair whose two economies you can follow.
- Observe its spreads and price behavior during the hours you are available.
- Test entry and exit rules with realistic trading costs.
- Calculate cash risk and check overlap with existing positions.
Keep the review pair dependent. Do not give GBP/JPY a wider risk budget simply because it has a reputation for movement, or assume that EUR/GBP will remain inside a familiar range. Require the proposed trade to justify its entry, invalidation level and costs.
Before funding an account, verify the provider as well as the product. The CFTC’s retail forex advisory recommends checking registration and disciplinary history and warns that margin trading can produce losses beyond the initial deposit. A sensible reason to trade a minor pair is a clear relative currency view with manageable costs and risk, not simply a desire for more action.