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USD Crosspairs

  • #1
  • First Post: Sep 13, 2016 8:49pm Sep 13, 2016 8:49pm
Hi,
Maybe a silly question but it does seem logical to me.

If we are trading variable base currency pairs against the USD. (ie GBP/USD, AUD/USD and NZD/USD) then as a general rule would all of them follow the same trend?
All go down for instance due to climbing USD!!
AND CONVERSELY - USD base currency pairs (ie USD/JAP, USD/CAD) be falling due to due to stronger USD making it's pair weaker.

Hope this is explained well enough. Just asking if this logic would be a fair assumption.

Given the fact that is indeed the case - then if you are going short on say AUD/USD then it would be pointless going short on JPY/USD, due to conflicting trends.
Thoughts please
  • #2
  • Sep 13, 2016 8:58pm Sep 13, 2016 8:58pm
Sorry - that should read USD base currency pairs be rising.
  • #3
  • Sep 13, 2016 9:25pm Sep 13, 2016 9:25pm
Keep in mind that a pair has 2 currencies involved ... So USD pairs are not perfectly correlated because of their own 2nd currency.
MT4/MT5 EAs/Indicators/Alerts coder
  • #4
  • Sep 13, 2016 9:30pm Sep 13, 2016 9:30pm
Thanks FerruFX,
I understand what you're saying. From my observations, it seems to be a general rule. I have saved myself from some bad trades by applying the theory.
  • #5
  • Sep 13, 2016 10:34pm Sep 13, 2016 10:34pm
Quoting arielcorp
Thanks FerruFX, I understand what you're saying. From my observations, it seems to be a general rule. I have saved myself from some bad trades by applying the theory.
Don't get me wrong ... I am not saying your way of looking at group of pairs is not fine. As a global picture, it is fine ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #6
  • Sep 14, 2016 4:36am Sep 14, 2016 4:36am
To follow up to what Ferrufx stated, see www.forexfactory.com/showthread.php?t=565244 for the mathematical relationship between all pairs.

Best,

Dave
  • #7
  • Feb 18, 2018 1:33pm Feb 18, 2018 1:33pm
Quoting FerruFx
Keep in mind that a pair has 2 currencies involved ... So USD pairs are not perfectly correlated because of their own 2nd currency.
I agree with you! Each and every pair has own principle! That’s way, I don’t care to open a sell position on the GBPUSD when I have a running buy position in the EURUSD.
  • #8
  • Feb 18, 2018 1:50pm Feb 18, 2018 1:50pm
Not my idea but one that follows "some" logic.

If you use the USD/SGD ($/Singapore) as a measure of USD strength its a better measure (in my opinion). Most indexes (DXY or the BB Dollar index) are way overweight on EUR influence.

Here is the logic:

 

  1. Pair is "sterile" in terms of non USD spikes.
  2. Pair is probably the most stable Emerging Market pair that is not manipulated by a Central Bank (a la China)

  • #9
  • Mar 6, 2018 10:18am Mar 6, 2018 10:18am
Quoting arielcorp
Hi, Maybe a silly question but it does seem logical to me. If we are trading variable base currency pairs against the USD. (ie GBP/USD, AUD/USD and NZD/USD) then as a general rule would all of them follow the same trend? All go down for instance due to climbing USD!! AND CONVERSELY - USD base currency pairs (ie USD/JAP, USD/CAD) be falling due to due to stronger USD making it's pair weaker. Hope this is explained well enough. Just asking if this logic would be a fair assumption. Given the fact that is indeed the case - then if you are going short...
No it's not like that. Yes sometimes it work as you said but remember one thing every currency pair has its own unique characteristics. It is better to learn only those pairs that you want to trade. For some people one or two pairs are enough. For me I only trade GBPUSD and EURUSD.
  • #10
  • Last Post: Mar 6, 2018 10:24am Mar 6, 2018 10:24am
There is some correlation, but my recommendation is to always watch out for fundamental news, because they can break that.
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