DEEP FOREX ANALYSIS

The Majors are the backbone of the foreign exchange market. They are called this because they represent the true benchmark: they are the most traded, the most liquid, and the ones every bank, fund, and trader watches to understand the direction of the market.

They all have one protagonist in common: the U.S. dollar (USD).
This is no coincidence, but the result of a precise historical path.

After World War II, the world needed stability. With the Bretton Woods Agreements (1944), the dollar was chosen as the cornerstone currency of the exchange system because the United States held the largest gold reserves. In practice, the dollar became the anchor of the international economy: every currency was tied to it, and the dollar itself was convertible into gold.

When Nixon suspended gold convertibility in 1971, the system did not collapse. On the contrary, the dollar retained its central role. Why? Because by then it had already established itself as the currency for commodities (oil, gold, wheat) and as the main means of payment in global trade. Central banks accumulated it as a reserve (see below), multinationals used it to settle contracts, and financial markets adopted it as the basis for calculation.

Even today, over 60% of global foreign exchange reserves are denominated in dollars. In other words, the dollar is not just a currency – it is the language of international economics.

And that is why all the Majors include the USD. Each one tells a different part of the global story:

• EUR/USD – “Fiber”
  • The duel between the euro, symbol of European integration, and the dollar, the hegemonic currency. It is the most liquid and closely watched pair in the world. The nickname Fiber was coined to contrast it with Cable (GBP/USD) and evokes modern fiber optics, symbolizing a new era compared to the old telegraph cable.
• GBP/USD – “Cable”
  • The British pound versus the dollar. The nickname Cable dates back to the 19th century, when a transatlantic telegraph cable connected London and New York, transmitting the first exchange rates between the two financial centers.
• USD/JPY – “Ninja”
  • A mirror of Japanese monetary policy and of Japan’s role as an Asian power. Often called Ninja in traders’ jargon due to its association with Japanese culture.
• USD/CHF – “Swissie”
  • The dollar against the Swiss franc, which for centuries has represented a safe haven in times of uncertainty. Affectionately called Swissie for simplicity.
• AUD/USD – “Aussie”
  • A pair linking the U.S. dollar to an economy rich in raw materials, highly sensitive to global demand for minerals and energy. The nickname Aussie comes from the colloquial term for Australia.
• NZD/USD – “Kiwi”
  • The currency of New Zealand, also tied to agricultural exports and commodities. The nickname Kiwi comes from the national bird, also depicted on the country’s coins.
• USD/CAD – “Loonie”
  • The dollar versus the Canadian dollar, closely connected to oil market dynamics. The nickname Loonie comes from the “loon” bird featured on the 1 CAD coin, so much so that it commonly identifies the currency itself.

In short, the Majors are not just simple currency pairs: they are the barometer of the world economy. Through them, the strength of the dollar is measured, the tensions between major economic areas are revealed, and the liquidity flows that drive global finance are observed.

Central banks accumulated it as a reserve

The centrality of the dollar goes beyond the foreign exchange market. Most of the U.S. public debt is held by foreign investors and central banks around the world: China, Japan, Saudi Arabia, and dozens of other countries have hundreds of billions of dollars in U.S. Treasury securities (bonds) on their balance sheets. A web of intertwined interests that binds the stability of the dollar inseparably to global financial equilibrium.

A fascinating and complex story, one that deserves a dedicated deep dive. But that… is another story.

If the Majors all have the U.S. dollar (USD) as their reference, the Crosses are the pairs that leave it out. At first glance, they look like “direct” exchanges between two currencies, but in reality they are the result of the respective Majors that compose them. They are like the third strand of a braided rope: born from the relationship between two economies through their link with the USD.

In the past, when the dollar was the mandatory intermediary, converting euros into yen actually meant going from EUR/USD to USD/JPY. But today, with the technological evolution of markets and growing liquidity, Crosses have begun to develop independent quotations, offering trading opportunities that are increasingly followed.

Some key Crosses

• EUR/GBP – “Chunnel”
  Reflects the relative strength between the euro and the pound. It is a deeply political pair, a mirror of the relationship between the European Union and the United Kingdom. The nickname Chunnel refers to the Channel Tunnel, symbol of the bond (and at times the tensions) between the two shores.
• EUR/JPY – “Euppy”
  A very liquid Cross that links the European and Japanese economies. Often used by traders to gauge global risk sentiment, since the yen tends to strengthen in times of uncertainty. The nickname Euppy is a phonetic hybrid of EUR and JPY.
• GBP/JPY – “Dragon” o “Beast”
  Among the most famous Crosses, known for its high volatility. It connects London and Tokyo, two central financial hubs, and is favored by those seeking big moves. The nicknames Dragon or Beast reflect its “wild” nature and difficulty to tame.
• AUD/NZD – “Kiwi-Aussie”
  The quintessential oceanic pair, comparing two economies tied to commodity exports and trade with Asia. It is a sort of “derby” between neighbors, with moves often more technical than speculative.
• EUR/CHF – “Euro-Swissie”
  A crucial Cross that links the common European currency with the Swiss franc, historically considered a safe haven. It is often at the center of interventions and decisions by the Swiss National Bank (SNB), making it a pair to watch closely.

In short, Crosses are not just simple alternatives to the Majors. They measure the relative strength between two economies and, precisely for this reason, can offer traders fertile ground for more refined strategies. Some, like GBP/JPY or EUR/JPY, are so liquid and closely followed that they have become “semi-Majors”: instruments that reveal tensions between continents and reflect global market sentiment.

The three-strand rope model

A Cross is never completely “independent.” Its price is the result of continuous tension between the two Majors that compose it and their link with the dollar.
Take EUR/GBP as an example and imagine it as a rope braided from three strands:

1. First strand: EUR/USD – the Major of the first currency against USD
   This strand represents the strength or weakness of the euro relative to the dollar. If the euro strengthens against the USD, this move pulls the rope in one direction.
2. Second strand: GBP/USD – the Major of the second currency against USD
   Here we measure the strength of the pound against the same dollar. If the pound gains ground, the pull goes in the opposite direction of the euro strand.
3. Third strand: EUR/GBP – the Cross itself
   This is the direct tension between the two economic areas: expected rate differentials (ECB vs BoE), growth, inflation, terms of trade (e.g., energy), balance of payments, political risk, as well as flows (corporate hedging, London fixings, month-end rebalancing). This strand can either amplify or dampen what the two Majors suggest.

In practice, the Cross is like a dynamic balance: it does not arise from a direct push, but from the difference in speed and intensity with which the two currencies move relative to the dollar.

Why this is crucial for a trader

• It means you cannot analyze a Cross in isolation: you must always look at the two Majors that compose it.
• It allows you to understand when a move is real (an autonomous push from one currency) or relative (a difference in reactions against the dollar).
• It turns the Cross into a true diagnostic tool: if EUR/GBP rises while both EUR/USD and GBP/USD are falling, it means the pound is losing more ground than the euro, not that the euro is absolutely strong.

This image of the braided rope helps you see Crosses for what they really are: not an independent alternative path apart from the dollar, but a play of relative forces that reflects the complexity of the Forex ecosystem.