X-Rate (Cross Rate)
A currency pair that doesn't include the US dollar, calculated from two USD pairs.
An X-rate is an exchange rate between two currencies that does not involve the US dollar, such as EUR/GBP or AUD/JPY. Crosses are derived from each currency's rate against the dollar.
An X-rate (cross rate or simply "cross") is an exchange rate between two currencies that doesn't involve the US dollar. Examples include EUR/GBP, AUD/JPY, and GBP/CHF. Cross rates are derived from each currency's rate against USD.
How It Works
- EUR/GBP derived from EUR/USD and GBP/USD
- EUR/JPY = EUR/USD × USD/JPY
- No direct USD involvement
- Spreads often wider than major pairs
Trading Tips
Cross rates can be more volatile
Liquidity varies by cross
EUR crosses most liquid among crosses
X-Rate (Cross Rate) Example
Say you need EUR/GBP but your feed only shows EUR/USD at 1.0850 and GBP/USD at 1.2700. Divide the two and the cross is about 0.8543: each leg through the dollar, combined into one rate your broker quotes directly.
How Traders Use X-Rate (Cross Rate)
Trade crosses for divergence between two economies, like ECB versus BoE. Remember both legs can move on dollar news, so check DXY before blaming the cross for a surprise.
Related Terms
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