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How does USD affect EURJPY?

  • #21
  • Oct 23, 2006 12:38pm Oct 23, 2006 12:38pm
smjones, I am sorry, but I am just not understanding this whole hedge thing. Just looking at the charts that bemac had put up, if for instance both the EUR/USD and GBP/USD are rising, should I go long with the EUR/GBP or is this not always the case? I am new to forex which is why this is not catching with me so easily.

thanks.
  • #22
  • Oct 23, 2006 12:59pm Oct 23, 2006 12:59pm
If EURUSD is rising, Then the dollar is weakening against the Euro
If GBPUSD is rising, then the dollar is weakening against the Pound
Now this does not tell you anything at all about whether the pound is stronger than the Euro, or vis-versa. The only way you could glean what the EURGBP is doing from the EURUSD and the GBPUSD, If the EURUSD and the GBPUSD were going in opposite directions.

For example:
If the EURUSD is rising, then the dollar is weakening against the Euro
If the GBPUSD is falling, then the dollar is strengthening against the Pound

So, that means that if the EURO is stronger against the dollar and the dollar is stronger against the Pound, then the EURO must be stronger against the Pound, So That would mean the EURGBP must be rising.




Quoting vder
smjones, I am sorry, but I am just not understanding this whole hedge thing. Just looking at the charts that bemac had put up, if for instance both the EUR/USD and GBP/USD are rising, should I go long with the EUR/GBP or is this not always the case? I am new to forex which is why this is not catching with me so easily.

thanks.
  • #23
  • Oct 23, 2006 1:59pm Oct 23, 2006 1:59pm
ahh ok got you, but I was just trying to recreate the example of when you were using the EJ, and the mathematical equation. The EU x UJ = EJ does not really represent how each currency is moving then right? The EJ equation your were talking about is about the strength of the currency rather than how it is calculated? I am trying to see how the equation and the explanation you gave relate to each other.
  • #24
  • Oct 23, 2006 6:00pm Oct 23, 2006 6:00pm
I should point out that the image I posted is only a part of the Spreadsheet.

The BUY/SELL Column is derived from further User Input information on the sheet. If I had tried to post an image of the entire sheet, you wouldn't have been able to see any detail.

Sorry fro any confusion.
  • #25
  • Oct 24, 2006 5:31am Oct 24, 2006 5:31am
Quoting smjones
If EURUSD is rising, Then the dollar is weakening against the Euro
If GBPUSD is rising, then the dollar is weakening against the Pound
Now this does not tell you anything at all about whether the pound is stronger than the Euro, or vis-versa. The only way you could glean what the EURGBP is doing from the EURUSD and the GBPUSD, If the EURUSD and the GBPUSD were going in opposite directions.
Does volume also effect the pairs? Suppose there is news that weakens the USD. So all big traders want to sell their dollars. They don't care what they get back, as long as they get rid of their dollars.
Now suppose there are 4 times as much euro's available than british pounds. That means that EURUSD will be traded far more than GBPUSD. So that could mean that the EURUSD could rise faster than GBPUSD. And that could mean that EURGBP would go up.
  • #26
  • Oct 24, 2006 5:55pm Oct 24, 2006 5:55pm
And yet there is no information as to whether this would be a certainty. The relationship between the EURUSD and the GBPUSD both rising does not garauntee the EURGBP will rise, only that it it could rise. However, when the 2 currency pairs are moving in opposite directions the EURGBP direction can be determined with certainty. It is a interesting point, and I am going to take some time to think about your concept some more.. I wonder if there is a way for determining the probability of the third pair from the rise differential of the first 2.... Hmm. I like homework,, thanks



Quoting JosTheelen
Does volume also effect the pairs? Suppose there is news that weakens the USD. So all big traders want to sell their dollars. They don't care what they get back, as long as they get rid of their dollars.
Now suppose there are 4 times as much euro's available than british pounds. That means that EURUSD will be traded far more than GBPUSD. So that could mean that the EURUSD could rise faster than GBPUSD. And that could mean that EURGBP would go up.
  • #27
  • Oct 25, 2006 10:20am Oct 25, 2006 10:20am
For a long time I watched these three markets side by side:

EUR/USD
USD/JPY
EUR/JPY

The EUR/USD and the USD/JPY are reciprical marekts, which means for the most part when one goes up, the other goes down. Notice how the USD is on the opposite side of the equation.

As for EUR/JPY, surprisingly, it sometimes moves in with the EUR/USD and other times moved with the USD/JPY. I thought by watching all three I could figure out some kind of money flow analysis, but the EUR/JPY always remained a wild card.

I'd like to learn more if anyone has any insights.
  • #28
  • Oct 25, 2006 10:36am Oct 25, 2006 10:36am
Assume there is news at 8:30 NY-time (14:30 Frankfurt-time) that is bad for the dollar. Traders will sell their dollars. Because Europeans are awake and Japanese are almost sleeping, I expect them to sell more dollars against euro's than against yens. So the euro should go up more than the yen against the dollar, which would mean that EURJPY would go up after bad news for the dollar. But is that what really happens?

They same theory could be true for important European news in the morning (10:30 Frankfurt-time). US-traders are sleeping, Japanese traders are working.
  • #29
  • Edited 5:42am Oct 26, 2007 5:29am | Edited 5:42am
The relationships between the various pairs can be decoded to give an 'absolute value' to each currency. This has been done in an excel sheet called 'forexgrail' which displays the relative currency strengths graphically.

Its a great way to give a fundamental value to a currencies strength, the trouble is no one to my knowledge has managed to develop a trading system around it!

Why?

I think essentially because its no different to most indicators: its tells you what has already happened.

attached are some screenshots taken today at around 10:20 GMT. The last one is what its all about. The red 'rubber bands' connecting the currencies move in real time, reflecting the change in currency strengths. Eg see how the EUR is the strongest and the GBP is the weakest of the currencies, so when you check out the EUR/GBP chart you see it trending upwards.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: strength form.jpg Size: 149 KB
Click to Enlarge Name: the lines.jpg Size: 56 KB
Click to Enlarge Name: total strengths.jpg Size: 58 KB
Attached Image
  • #30
  • Oct 26, 2007 5:43am Oct 26, 2007 5:43am
Red line indicates time when attachments in the previos post were created.
Attached Image (click to enlarge)
Click to Enlarge Name: EUR-GBP.jpg Size: 144 KB
  • #31
  • Oct 26, 2007 7:06am Oct 26, 2007 7:06am
Quoting zozem
As for EUR/JPY, surprisingly, it sometimes moves in with the EUR/USD and other times moved with the USD/JPY. I thought by watching all three I could figure out some kind of money flow analysis, but the EUR/JPY always remained a wild card.

I'd like to learn more if anyone has any insights.

currently e/u is 1.4362 and u/j is 114.28 and hence e/j is 164.13.

now, technically, if u read 14362 and 11428 respectively, the smaller number i.e. 11428 the u/j would be the 'controller' which means if u/j more a little e/j would be magnified more, so to play e/j you would have to watch u/j more so than e/u. Hope that explains well. Anyone think alike?

so what about fundamental view on cross pairs? Anyone shed some views?
  • #32
  • Jun 14, 2008 8:39am Jun 14, 2008 8:39am
...to post this link:

This Tool Should Be on Every Forex Trader's Desk

By Kathy Lien | TradingMarkets.com | September 13, 2005
(....a bit old, I know, but the fundamentals are still valid.)

In order to be an effective trader, it is also important to understand how different currency pairs move in relation to each other. There are a few reasons why this is significant, but most importantly, it allows traders to understand their exposure. That is, having a portfolio that consists of the EUR/USD and GBP/USD is different from having a portfolio that consists of the EUR/USD and USD/CHF.

As indicated in the tables below, over the past year, the EUR/USD has had a strong positive correlation (+0.94) with the GBP/USD and a strongly negative correlation with USD/CHF (-0.98).Therefore having a long EUR/USD and long USD/CHF exposure would generally lead to negated or nearly zero profit or losses because when the EUR/USD rallies, USD/CHF will sell off the majority of the time.

Of course, these two currencies have different pip values, so the P/L may not be exactly zero. On the other hand, holding long EUR/USD and long GBP/USD exposure is similar to doubling up on the position since the correlation is so strong....

Regardless of your trading strategy and whether you are looking to diversify your positions or find alternate pairs to leverage your view, it is very important to keep in mind the correlation between various currency pairs and their shifting trends.

There is a set of tables with the article. (Just click on the title, naturally )
HELL IS EMPTY, ALL THE DEVILS ARE HERE. -- Shakespeare
  • #33
  • Mar 5, 2011 9:22am Mar 5, 2011 9:22am
Hello smjones, sorry to bring this back up but I think it may be relevant to the eurjpy right now. It has just closed above the 7/25 weekly high and my bias is for it to go up unless it goes back down again next week and not breakout. It may be too little too late.

Does this imply that eurusd and usdjpy would go up as well but just based on direction if you only knew of eurjpy's price action? I'm not sure if this is the case.


Quoting smjones
And of course this is not limited to just this set.
There is GBPUSD,USDJPY, GBPJPY
EURUSD, USDCHF,EURCHF If you think about it the list is huge, then you can start looking at all the nondollar sets... If you know two, you must know the third, both actual price and direction.
  • #34
  • Mar 6, 2011 1:53am Mar 6, 2011 1:53am
I went ahead to calculate the magnitudes of the cross currencies and found that they are derived from the products of dollar based pairs.

I think if one had a reliable trading plan for a cross pair, then they can pretty much determine both the magnitude and direction of the product pairs as well.


Quoting Datu
Hello smjones, sorry to bring this back up but I think it may be relevant to the eurjpy right now. It has just closed above the 7/25 weekly high and my bias is for it to go up unless it goes back down again next week and not breakout. It may be too little too late.

Does this imply that eurusd and usdjpy would go up as well but just based on direction if you only knew of eurjpy's price action? I'm not sure if this is the case.
  • #35
  • Sep 17, 2025 9:24am Sep 17, 2025 9:24am
here is my long of eur jpy.............
Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYH1 ejj.png Size: 9 KB
bakare
  • #36
  • Sep 18, 2025 6:57am Sep 18, 2025 6:57am
eur jpy before and after....
Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYH1 after.png Size: 9 KB
bakare
  • #37
  • Last Post: Sep 18, 2025 1:05pm Sep 18, 2025 1:05pm
It affect EURJPY because of EURUSD and USDJPY. Other things like ECB/BOJ decisions, interest rates, and market mood can push it up or down.
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