A currency pair shows you what one currency is worth when compared to another – like EUR/USD or USD/INR.
When trading Forex, you will inevitably deal with a pair. Then there are the major, minor and exotic groups that you will probably stumble upon first.
Major, Minor and Exotic Currency Pairs at a Glance
- Major pairs:
The US dollar paired with another heavily traded currency, like EUR/USD.
- Minor pairs (cross pairs):
Two major currencies that do not include the US dollar, like GBP/JPY.
- Exotic pairs:
A major currency paired with the currency of a smaller or emerging economy, like USD/INR.
Majors are generally the most heavily traded and have lower costs. Exotics are generally less traded and have higher costs.
What is a Currency Pair in Forex?
So what’s a Forex currency pair all about? Essentially it is a simple statement of how much of one currency you need to buy the other one.
It is just another way of saying “foreign exchange” markets, where countries exchange currencies with each other – that is the global market.
Each pair has two parts:
- Base currency: The first currency in the pair. It is always counted as one unit.
- Quote currency: The second currency. It shows how much of it equals one unit of the base.
A Simple Example: EUR/USD
Take the pair EUR/USD – here the Euro (EUR) is the base currency and the US dollar (USD) is the other one. Don’t worry too much about the jargon, just remember that it’s a comparison between two different currencies.
So if you see EUR/USD quoted as 1.0800, that means one Euro will get you 1.08 US dollars.
If the price goes up to 1.0900, the Euro has suddenly become more valuable compared to the dollar.
On the other hand if it slips down to 1.0700, the Euro is worth less. And that is the whole point of a price quote – it just compares two different currencies.
What are Major Currency Pairs?
Major currency pairs combine the US dollar with another heavily traded currency.
They are the most commonly quoted pairs in the Forex market.
The seven pairs usually listed as majors are:
- EUR/USD – euro and US dollar
- USD/JPY – US dollar and Japanese yen
- GBP/USD – British pound and US dollar
- USD/CHF – US dollar and Swiss franc
- AUD/USD – Australian dollar and US dollar
- USD/CAD – US dollar and Canadian dollar
- NZD/USD – New Zealand dollar and US dollar
Majors generally have high liquidity.
Liquidity means how easily a currency can be bought or sold without big price jumps. They also usually have tighter spreads.
A spread is the small gap between the buying price and the selling price. It is one cost of trading.
What are Minor Currency Pairs?
Minor currency pairs, also called cross pairs, do not include the US dollar.
They are made of two major currencies, such as the euro, pound or yen.
Common examples include:
- EUR/GBP – euro and British pound
- EUR/JPY – euro and Japanese yen
- GBP/JPY – British pound and Japanese yen
- AUD/NZD – Australian dollar and New Zealand dollar
Minors are generally traded less than majors. Their liquidity is usually moderate, and their spreads are often a little wider than major pairs.
What are Exotic Currency Pairs?
Exotic currency pairs are the ones made up of a major currency and that from a smaller, developing country.
They tend to be traded significantly less often than the big boys.Exotic currency pairs examples:
- USD/INR – US dollar and Indian rupee
- USD/TRY – US dollar and Turkish lira
- USD/ZAR – US dollar and South African rand
- EUR/TRY – euro and Turkish lira
Exotics generally have lower liquidity and wider spreads. Their prices can also move more sharply at times.
This is why they are often described as having higher risk.
Major vs Minor vs Exotic Currency Pairs: Key Differences
The main thing is the currencies that are used, that is what sets them apart.
This also affects how much trade there is in them and the spreads you are likely to get.
| Currency Pair Type | Does It Include USD? | Examples | Liquidity | Spread | Beginner-Friendly Explanation |
| Major | Yes | EUR/USD, USD/JPY, GBP/USD | High | Generally tight | The US dollar plus another heavily traded currency |
| Minor (cross) | No | EUR/GBP, GBP/JPY, AUD/NZD | Moderate | Generally moderate | Two major currencies without the US dollar |
| Exotic | Usually yes, but not always | USD/INR, USD/TRY, USD/ZAR | Lower | Generally wider | A major currency plus a smaller or emerging-market currency |
Spreads change with market conditions and with the broker or platform, so the table shows general patterns only.
Examples of Major, Minor and Exotic Currency Pairs
Here is a quick way to spot the type of any pair:
Is the US dollar paired with another major currency?Â
It is a major pair.
Example: GBP/USD.
Are both currencies major, with no US dollar?
It is a minor pair.
Example: EUR/JPY.
Is one currency from a smaller or emerging economy?
It is an exotic pair.
Example: USD/INR.Try it with USD/CAD. The US dollar is paired with the Canadian dollar, a major currency. So it is a major pair.
Which Currency Pair Should Beginners Know First?
Beginners need to get the hang of what base and quote currencies look like first, before getting too hung up on the specifics of each one.
Once that is clear, the major pairs make a great place to start getting more familiar.
That is because they crop up so much in Forex education and the news.
This is not a recommendation to trade any pair. Every pair carries risk.
The aim at this stage is only to understand the terms.A simple learning path:
- Learn base and quote currencies
- Learn the seven major pairs
- Understand how minors and exotics differ
- Then explore related terms like pips and spreads
Conclusion
Major, minor and exotic currency pairs are simply three ways of grouping Forex pairs.
Majors include the US dollar, minors are cross pairs without it, and exotics bring in smaller or emerging currencies.
Once you can read a pair and name its type, you have mastered one of the first building blocks of Forex terminology.
