Cross Currency

A cross currency is any pair in which neither currency is the USD. These currency pairs may exhibit erratic price behavior since the Forex trader has initiated two Forex trades in USD. For example, the Forex trader traded the cross currency GBP/JPY. In fact he bought a GBP/USD currency pair and he sold a JPY/USD currency pair. It is obvious that cross currency pairs frequently carry a higher Forex transaction cost. The three most frequently traded cross currency rates are:

• EUR/JPY
• GBP/EUR
• GBP/JPY

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