Two currencies, no dollar between:a cross is priced from rates unseen.
An exchange rate between two currencies that does not include the US dollar, such as EUR/GBP or AUD/JPY.
Cross rates are derived from each currency’s rate against the USD.
In plain words
A cross rate is an exchange rate between two currencies neither of which is the US dollar, such as EUR/GBP or AUD/JPY. Because most currencies trade most actively against the dollar, a cross can be worked out from the two dollar rates.
See it move
Stage 2 of 3: USD
Why it matters
A cross moves when either of its two dollar pairs moves, so it has two sources of change. Crosses often carry wider spreads than the most traded dollar pairs.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
EUR/USD is 1.2000 and GBP/USD is 1.5000 (invented round figures).
- 1One euro = 1.2000 US dollars
- 2One pound = 1.5000 US dollars
- 3EUR/GBP = 1.2000 ÷ 1.5000 = 0.8000
One euro buys 0.80 pounds, a rate reached without quoting euros against pounds directly.
A common mistake
It is often assumed that a cross has nothing to do with the dollar. EUR/GBP can move because of news that affects only EUR/USD or only GBP/USD.
Check yourself
Educational information, not investment advice or a recommendation to trade.