Currency Pairs and Relative Pricing

Currency pairs and relative pricing follow from one fact: a currency has no price of its own, only a price in another currency. Ask whether the dollar is up today and the honest answer is “against what?”

The dollar can rise against the yen and fall against the euro in the same hour. USD/JPY and EUR/USD are separate prices, each set by two economies. How to read which currency is which in a quote is in What Is Base and Quote Currency?

Which side moved?

Say EUR/USD goes from 1.1000 to 1.1100 (example prices). The euro could have risen, the dollar could have fallen, or both. The EUR/USD chart alone cannot tell you which.

The other pairs can. If GBP/USD and USD/JPY show the dollar weaker too, the move is mostly the dollar. If the dollar is steady elsewhere while EUR/GBP and EUR/JPY are up, it is the euro. Thirty seconds of checking saves you from building a story about Europe when the news was in Washington.

How much of the move is the dollar’s depends on the pair. From 1999 to September 2026, about 58% of the day-to-day variation in EUR/USD went in step with the dollar’s average move against six other majors: the pound, the yen, the Swiss franc and the Canadian, Australian and New Zealand dollars. For GBP/USD it was 43%. For USD/JPY it was 7%, so most of its daily variation was not shared with the dollar’s move against the others.

The shares shift over time. From 2022 they rose to about two-thirds for EUR/USD and GBP/USD and 28% for USD/JPY. From 2008 to 2021, USD/JPY’s was 2%.

Those are squared correlations of daily changes in the Fed’s noon exchange rates, each pair against the average of the other six. Some of what EUR/USD shares is European rather than the dollar’s, since the pound and the franc often move with the euro, so read the euro and pound figures as upper limits. Like any correlation, they describe the past and can change.

Measuring one currency on its own

To ask whether a currency is strong in general, you need it against many partners at once. That is an effective exchange rate, which the BIS defines as a weighted average of bilateral exchange rates. Its broad indices cover 64 economies, in a nominal version and a real one adjusted for relative consumer prices (BIS effective exchange rates).

For a quick version, line the pairs up yourself. The dollar’s majors side by side are on Major forex pairs: prices and fundamentals.

Crosses are built from dollar pairs

In April 2025 the ten most traded pairs all had the dollar in them, which the BIS puts down to its status as the world’s vehicle currency (BIS Triennial Survey). A pair without the dollar, such as EUR/GBP or AUD/JPY, is called a cross, and its price follows from two dollar pairs.

With EUR/USD at 1.1000 and GBP/USD at 1.3000, EUR/GBP is 1.1000 ÷ 1.3000, about 0.8462. Now let the dollar strengthen 1% against both: EUR/USD 1.0890, GBP/USD 1.2870. Divide again and EUR/GBP is still 0.8462. The dollar cancels out, and what is left is the euro against the pound.

That is why a cross is often the cleaner way to act on a view about two currencies that are not the dollar. A big dollar day can swing both legs and leave the cross where it was.

Every release has a second half

A US inflation report above the forecast tends to support the dollar. Whether EUR/USD falls depends on whether the report widens the expected gap between the Fed’s path and the ECB’s. If euro area figures the same week push the ECB just as hard, the pair can sit still.

The rate side of that comparison is in Anatomy of a Rate Differential. The gap for every major pair today is on Interest rate differential by currency pair, and after inflation on Real interest rates by currency.

A pair page puts both currencies’ rates, inflation, growth, unemployment and positioning in two columns, as on EUR/USD fundamentals. Fill in both columns before you take a view. How the two sides combine into a lean on the pair is in What Is a Fundamental Bias?