Cross Rate

Most currencies around the world are priced against the US dollar first. A cross rate skips the dollar entirely and quotes two non-dollar currencies directly against each other. Common examples include EUR/JPY (euro versus Japanese yen), EUR/GBP (euro versus British pound), and GBP/JPY (pound versus yen). Because the dollar is the world's primary reserve currency, cross rates are often derived — at least conceptually — by combining two dollar-based quotes, which is where they get the name "cross."

Suppose EUR/USD is 1.0800 and USD/JPY is 150.00. Multiplying those two rates gives an implied EUR/JPY of 162.00. In practice, the live EUR/JPY quote in the market should sit very close to that implied level; if it doesn't, professional traders exploit the gap immediately, a process called triangular arbitrage that keeps cross rates in line. This mechanical relationship is explained further in the how to read FX quotes guide.

Cross rates generally carry wider bid-ask spreads and thinner liquidity than major pairs, which can make percentage moves look larger even on modest trading activity. Economists watch cross rates to isolate bilateral trade and policy dynamics — for instance, EUR/GBP reflects eurozone-versus-UK factors without dollar noise interfering. Live cross-rate data is available on the currencies page.