A cross pair excludes the US dollar, but it can still be influenced by dollar-related capital flows. Quotes must remain directionally consistent when deriving a cross: multiply or divide according to the units, not by memorizing a shortcut.
Carry describes the financing benefit or cost associated with holding exposure. Retail swap charges depend on product and broker terms and are not simply the difference between two central-bank rates. A positive carry does not protect against a price loss, liquidity shock or changing financing terms.
Worked example
If EUR/USD is 1.10 and USD/JPY is 150, the implied EUR/JPY is 165 before dealing spreads. The USD units cancel in the multiplication.
Check your understanding
Can a positive daily swap make a trade risk-free?
Show explanation
No. Adverse price moves and changes in costs can exceed the financing income.
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