Cross Rate
A cross rate is the exchange rate between two currencies, derived from each one's rate against a third currency — usually the US dollar. If EUR/USD is 1.10 and USD/JPY is 150, then EUR/JPY is about 1.10 × 150 = 165.
A cross rate is the exchange rate between two currencies, derived from each one's rate against a third — usually the US dollar. Some well-known pairs, such as EUR/JPY, trade directly, but their prices still stay close to the rate implied through the dollar.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Cross currency rate, Cross exchange rate
- Updated
A cross rate in plain words
A cross rate is worked out from each currency's rate against a third currency.1
It is used when two currencies have no direct market quote of their own; the go-between is usually the US dollar.2
Example: if EUR/USD is 1.10 and USD/JPY is 150, then EUR/JPY ≈ 1.10 × 150 = 165.
How to calculate a cross rate
Pick the pair
Decide which two currencies you need, such as EUR and JPY.
Find the third currency
Find each currency's rate against the same third currency.1
Get both dollar rates
Use the rates of each currency against the US dollar.2
Multiply or divide
If the dollar sits on opposite sides, multiply; if on the same side, divide.
Check the quote
Confirm which is base and which is quote currency.
Compare to market
Directly traded crosses should sit near the computed value.
Worked examples
Example 1 — EUR/JPY
165EUR/USD 1.10, USD/JPY 150.
| EUR/JPY | 1.10 × 150 = 165 |
The euro–yen rate came from both currencies' rates against the dollar.2
Example 2 — Divide case
1.50Hypothetical USD/CHF 0.90, USD/CAD 1.35.
| CHF/CAD | 1.35 ÷ 0.90 = 1.50 |
Both quotes were against the dollar, so dividing one by the other gives the cross rate.1
Example 3 — Official rates
Derived ratesA hypothetical central bank sets local rates for many currencies from one dollar rate.
| Inputs | USD/local and each USD rate |
Some central banks set their official rates this way: Kazakhstan derives the tenge's rate against other currencies from USD/KZT and each currency's dollar rate.2
Cross rate vs major pair
| Aspect | Cross rate | Major pair |
|---|---|---|
| Includes USD | No | Yes |
| Derived from | Two dollar pairs | Direct market |
| Spread | Often wider | Usually tight |
| Example | EUR/JPY | EUR/USD |
Where cross rates matter
Forex trading
Pricing a Trading Pair without the dollar.
Spread costs
Crosses can carry a wider Bid-Ask Spread.
Position size
Converting Pip Value into your account currency.
Hedging
Hedging exposures between two non-dollar currencies.
Advantages and disadvantages
Advantages
- Lets you price any currency pair.
- Shows if a direct quote looks off.
- Helps convert profits and pip values.
Disadvantages
- Spreads on crosses can be wider.
- Small errors compound through two rates.
- Base/quote mix-ups are common.
- Two dollar legs can move at once.
Going deeper
Read as far as you need. Each level builds on the one before it.
The idea
Beginner
Any cross rate is just two dollar rates (or other base rates) combined.1
Why the dollar
Intermediate
The dollar is the usual go-between because so many currencies trade against it directly.2
Official use
Advanced
Some central banks publish official rates this way, combining the local currency's dollar rate with other currencies' dollar rates.2
Common mistakes
Multiplying when you should divide
Check where USD sits.
Mixing base and quote
Write the pair out first.
Ignoring spread
Use bid and ask, not mid only.
Using stale rates
Both legs must be current.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- A cross rate uses a third currency.
- The US dollar is usually that third currency.
- Multiply or divide depending on where USD sits.
- Crosses may have wider spreads.
- Check base and quote carefully.
Frequently asked questions
Is EUR/GBP a cross?
Why are cross spreads wider?
Can I compute any cross?
Further learning
- Trading Pair
How pairs are quoted.
- Pip Value
Value of a move.
- Bid-Ask Spread
Cost of crosses.
- Spot Trading
Spot currency deals.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Reserve Bank of Australia. Understanding Exchange Rates and Why They Are Important (opens in a new tab) Checked .
- National Bank of Kazakhstan. Frequently asked questions answered (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.