Currency Pairs

In this article, we’ll explore what currency pairs are, how they are formed, and the main categories they fall into.

Let’s start with the basics — what exactly is a currency pair? A currency pair is a financial instrument that represents the exchange rate between two currencies. In simple terms, it shows how many units of one currency are needed to buy one unit of another.

Contents:

The first currency in a pair is called the base currency, while the second is the quote currency. For example, in the EUR/USD pair, the euro — the first currency — is the base, and the dollar is the quote currency.

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This means that if EUR/USD is quoted at 1.18515, one euro can be exchanged for 1.18515 US dollars. This rule applies to all currency pairs.

For trading on Forex, this level of understanding is more than enough — there’s no need to overload yourself with information that you won’t actually use in practice.

You’ve probably heard of major, minor, and exotic pairs. Below, we’ll take a closer look at each type.

Major Pairs

Major currency pairs consist of eight leading currencies representing the world’s largest economies. These currencies form seven major pairs with the US dollar, which is currently considered the driving force of the global economy.

The seven major pairs:

Why are these pairs good for traders? They have the highest liquidity, thanks to a large number of major market participants, which also results in tight spreads.

Minor Pairs

Minor pairs include the seven major currencies from the major pairs, but without the US dollar. These currencies are paired with each other to form minor currency pairs.

Here are all of them:

These pairs are fairly liquid, although their spreads are significantly wider than those of the major pairs. At the same time, the volatility of some of these pairs can even exceed that of the major pairs.

Exotic Pairs

Exotic pairs include all other currency pairs that do not fall into the two groups mentioned above. They are the least popular for trading and generally have wide spreads, making them less suitable for day trading.

Here are some examples of exotic pairs:

Some brokers classify certain minor pairs as exotic, while exotic pairs may be included in the minor category.

Comments

Scott
Scott 2025-11-01 03:59:45 #
For example, the USD/MXN pair — where should it be classified? It definitely doesn’t belong to the exotic category, as it is fairly liquid. I consider it and similar pairs to be minor, even though they include the US dollar.
gendeLL
gendeLL 2025-06-01 12:11:11 #
Minor pairs are often called crosses, as they are currency pairs that do not include the US dollar.
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