Since the Bretton Woods Agreement of 1944, the United States has been the global reserve currency, which makes the US dollar (USD) the currency of choice in international trade. The US dollar is on one side or the other of around 88% of all global FX transactions. In other words, it’s the most important of the majors.

The euro (EUR) is the second most traded currency, making up around 32% of all global FX transactions. The Japanese yen (JPY) is third, coming in at 17%. The pound sterling (GBP) is fourth at 13%.The Australian dollar (AUD) is fifth at 7%, the Canadian dollar (CAD) is sixth at 5%, and the Swiss franc (CHF) is seventh at 5% of global FX turnover.

A major currency pair is basically the US dollar paired against any of the above currencies. And since the exchange rate refers to how many units of the second currency in the pair (quote) are required to buy a unit of the first currency in the pair (base), the exchange rates of most major pairs tell you how much in that second currency a single US dollar is worth. This is true of all pairs except the euro, which since its inception in 1999 always takes precedence as the base currency, despite being second to the dollar in terms of turnover.

The minor, or cross, currencies comprise all of the above major currencies when paired against each other without the US dollar.

The exotic currency pairs are those that feature the currency of an emerging market or less liquid currency in terms of global turnover on one side of the pair. Currencies such as the Chinese reminbi (CNY), Mexican peso (MXN), Turkish lira (TRY), Singapore dollar (SGD), Russian ruble (RUB), and Norwegian krone (NOK) are all considered exotic currencies