Trading Cross Currencies

Currency crosses are also known as cross currency pairs. They are, simply, currency pairs that do not involve the US dollar. Trading in currency crosses makes up less than 10% of the market. Currency crosses that use the euro are typically called euro crosses. Other pairs are often called cross rates. It used to be that all currencies had to be traded to dollars and then converted to another currency. However, that system has been atrophying for some time. As trade volume has grown among individual countries, the forex markets have adapted.
One of the first currency pairs to not involve the US dollar was the GBP/JPY. The GBP has a reputation of being a oil-neutral currency. Because the country's exports and imports of oil roughly balance each other out, when the oil market is showing jitters, traders used to rush the the pound as a safe haven. The favorability of the GBP combined with the importance of the Japanese economy to lead many firms and investors to start trading in GBP/JPY long before currency crosses were at all well-known.
Since the markets have gained confidence in the euro, currency crosses are becoming more and more common. For instance, roughly 50% of the UK's trade is with Europe, so it makes since the EUR/GBP has become a more common pair lately. That being said, currency crosses still make up a much smaller proportion of forex activity than the majors. As such, these pairs are considerably less liquid than the majors. Furthermore, trading hours are often restricted for non major pairs. These two factors seriously reduce the number of traders that actively trade in cross currency pairs. While it is probable that currency crosses will slowly grow over the long term, it is very likely that they will only make up a small share of overall forex trading volume for a very long time