In forex trading terminology, cross currency refers to a pair of currencies that do not include the U.S. dollar. It is commonplace in the forex market to exchange any foreign currency to U.S. dollars before trading. Cross currency is a technique that aims to completely bypass the need to convert currency to American dollars before converting it back to the desired foreign currency. The four major currency pairs: GBP/USD (British pound-U.S. dollar), EUR-USD (euro-U.S. dollar), USD/CHF (U.S. dollar-Swiss franc), and USD/JPY (U.S. dollar-Japanese yen) are highly affected by the movements of the U.S. dollars. Trading the U.S. dollar leaves one with no other option other than waiting for the dollar to weaken.
Cross currency allows profitable currency trading regardless of the performance of the U.S. dollars. Ninety per cent of forex market players trade in the four major currency pairs that involve the U.S. dollar.
