Understanding Minor Currency Pairs in Forex Trading
Introduction
In the dynamic world of forex trading, currency pairs form the core of all transactions. While most traders focus on major pairs like EUR/USD or GBP/USD, there is a lesser-known yet potentially rewarding segment called minor currency pairs. These pairs can offer strategic opportunities for diversification, volatility trading, and lower competition.
In this blog by Signal Expert Global, we will explore:
What minor currency pairs are
Key examples of minor pairs
How they differ from major and exotic pairs
Their pros and cons
How to trade them efficiently
Whether you’re a beginner or an experienced trader, understanding these pairs can enhance your strategy and open new possibilities.
Minor currency pairs, also known as cross-currency pairs, are forex pairs that do not include the US Dollar (USD). However, they always consist of two strong global currencies, such as the Euro (EUR), British Pound (GBP), or Japanese Yen (JPY).
Example of Minor Currency Pairs:
EUR/GBP – Euro vs British Pound
EUR/JPY – Euro vs Japanese Yen
GBP/JPY – British Pound vs Japanese Yen
AUD/JPY – Australian Dollar vs Japanese Yen
CHF/JPY – Swiss Franc vs Japanese Yen
NZD/JPY – New Zealand Dollar vs Japanese Yen
EUR/AUD – Euro vs Australian Dollar
These pairs are widely traded but less liquid than the major pairs, offering different trading dynamics.
| Feature | Major Pairs | Minor Pairs | Exotic Pairs |
|---|---|---|---|
| Includes USD | Yes | No | Usually includes USD |
| Liquidity | High | Moderate | Low |
| Spreads | Low | Medium | High |
| Volatility | Moderate | High | Very High |
| Examples | EUR/USD, GBP/USD | EUR/GBP, AUD/JPY | USD/TRY, USD/SEK, USD/ZAR |
Why Trade Minor Currency Pairs?
1. Diversification
Trading minor pairs helps reduce dependency on USD fluctuations. For instance, if USD volatility is high, you can switch to EUR/GBP or GBP/JPY.
2. Unique Volatility Opportunities
Certain minor pairs like GBP/JPY are known for large price movements, which can be beneficial for scalpers or intraday traders.
3. Lower Competition
While major pairs attract institutional and high-frequency traders, minor pairs are relatively less crowded, giving retail traders more room to operate.
Risks Associated with Minor Pairs
Despite their advantages, minor currency pairs come with specific challenges:
Wider spreads: Compared to majors, the cost of entry can be higher.
Lower liquidity: Can lead to slippage during high-impact news.
High volatility: Sudden price spikes are common, especially in pairs like GBP/JPY.
Risk management tools such as stop-loss and take-profit become crucial while trading these instruments.
How to Analyze Minor Currency Pairs
1. Technical Analysis
Minor pairs follow technical patterns like majors. Tools like RSI, MACD, Bollinger Bands, and Fibonacci retracements work well.
2. Fundamental Analysis
Track economic indicators of both countries involved. For example, for EUR/GBP, monitor:
European Central Bank (ECB) rate decisions
UK GDP and inflation data
Political developments like Brexit updates
3. Market Sentiment
Use sentiment indicators, COT reports, and news sentiment tools to gauge market mood around a pair.
Tips for Trading Minor Currency Pairs
Use a Trusted Broker – Ensure tight spreads and fast execution.
Time Your Entry – Trade during sessions when both currencies are active (e.g., EUR/GBP during London session).
Set Wider Stop-Losses – Account for increased volatility.
Avoid Overleveraging – Wider spreads can hurt over-leveraged positions.
Practice on Demo First – Test your strategies without risk.
Popular Minor Currency Pairs to Watch
| Pair | Region | Traits |
|---|---|---|
| EUR/GBP | Europe | Stable, low volatility |
| GBP/JPY | Europe/Asia | High volatility, sharp moves |
| EUR/JPY | Europe/Asia | Trend-friendly, steady volume |
| AUD/JPY | Australia/Asia | Volatile, commodity-influenced |
| EUR/AUD | Europe/Australia | Geopolitical sensitive |
Should You Add Minor Pairs to Your Strategy?
Yes, but only with proper analysis and risk control. Minor pairs can complement your trading strategy by:
Helping hedge positions on major pairs
Providing alternative opportunities when major pairs are flat
Allowing for greater global market exposure
If you’re using a signal service like Signal Expert Global, you may even receive tailored alerts based on cross-currency analysis.
Final Thoughts
Minor currency pairs are often overlooked, but they can provide compelling opportunities for educated traders. With strong analytical support, risk management, and awareness of macroeconomic factors, these pairs can significantly enhance your forex portfolio.
Whether you are day trading, swing trading, or using automated signals — understanding the dynamics of minor pairs is crucial to expanding your market knowledge.