Currency Pairs Explained: Majors, Minors and Exotics

Every forex trade involves a currency pair — two currencies quoted against each other, where the first is the “base” currency and the second is the “quote” currency.

Reading a pair

In EUR/USD, EUR is the base currency and USD is the quote currency. A price of 1.0850 means 1 euro buys 1.0850 US dollars. When the price rises, the base currency is strengthening against the quote currency.

Major pairs

Majors are the most heavily traded pairs, all involving the US dollar paired with another large economy’s currency — EUR/USD, USD/JPY, GBP/USD, USD/CHF. They typically have the tightest spreads because of their high liquidity.

Minor pairs

Minors (also called “crosses”) pair two major currencies without the US dollar, such as EUR/GBP or AUD/JPY. They’re still liquid but usually have slightly wider spreads than majors.

Exotic pairs

Exotics pair a major currency with a currency from a smaller or emerging economy, such as USD/TRY or USD/THB. They tend to have wider spreads and higher volatility due to lower trading volume.

Key takeaway

Majors are generally the easiest and cheapest pairs for beginners to trade, thanks to tight spreads and high liquidity. Minors and exotics can offer opportunities but usually come with higher costs and volatility.