Major pair

In everyday market language, the major pairs are the most traded currency pairs, and every one of them includes the US dollar. The list most people use has seven: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD and NZD/USD. They usually have the deepest liquidity and the tightest spreads, which is why most beginners start with them. Pairs without the dollar, such as EUR/GBP, are usually called crosses or minors.

The regulatory definition is different

For EU retail clients, "major" has a narrower legal meaning. Under ESMA's leverage limits, the 30:1 cap applies to "major currency pairs", defined as any combination of only these six currencies: USD, EUR, JPY, GBP, CAD and CHF. Every other currency pair is capped at 20:1.

That produces two results that surprise people:

• AUD/USD and NZD/USD, which most traders call majors, are limited to 20:1 for EU retail clients, because the Australian and New Zealand dollars are not on the list.
• Crosses such as EUR/GBP, EUR/JPY, GBP/JPY and EUR/CHF are allowed 30:1, because both currencies are on the list.

Example

With 30:1 leverage, opening one standard lot of EUR/USD (100,000 euros) at 1.1000 needs margin of 110,000 divided by 30, or about 3,667 dollars. The same size in AUD/USD at 0.6500 (65,000 dollars of exposure) at 20:1 needs 3,250 dollars rather than about 2,167. These are illustrative prices; the margin calculator works it out for live ones.

Higher allowed leverage does not make a pair safer. It only changes how little margin the broker must hold. See currency pairs explained for the full classification.