[XMTrading: For beginners] Currency pair correlation of FX euro dollar (EUR/USD), dollar yen (USD/JPY) and gold (GOLD) Investment method explanation


We will explain the inverse correlation, direction, price movement, and trading methods for the dollar-yen, euro-dollar, and gold currency pairs in FX. Gold trading tends to be linked to the currency market. Therefore, since there is a correlation, it is very easy to combine it with the euro dollar or dollar yen.

The US dollar is the world’s key currency

The American dollar (US dollar) is the world’s reserve currency. The most valuable legal currency is the US dollar. Therefore, American economic information will have a negative impact on all currency pairs. For this reason, when an emergency occurs in the United States, the US dollar is sold, but when the market and political situation are stable, the dollar tends to be bought. Also, although it is not as bad as gold, when the world becomes unstable, the number of people who compare and predict US dollar data tends to increase when it comes to foreign exchange. The euro becomes the next indicator for investment decisions.

The Japanese yen is a risk-averse currency

In the foreign exchange market, Japanese yen tends to buy positions for risk aversion. When affected by a financial crisis, the basic trend is that the yen is bought over a long period of time, so it is easier to make profits among investment products. If it moves strongly, you can assume that some fundamental factor is at work. There is also a correlation with gold. Both are bought in times of crisis, such as financial crises or wars. The 2021 market was an exception, but you will also need the ability to understand the market flow yourself.

Gold is risk averse

On the other hand, if you analyze gold, you will understand that the price of gold fluctuates widely, and many people want to hold it more than the US dollar for risk aversion. During times of war or bad economic conditions, many people buy strong gold instead of the US dollar. Since gold is a physical asset, it will never disappear, so the more anxious people are, the more they want to hold onto gold. Therefore, when anxiety spreads, gold tends to be bought and the US dollar tends to be sold. There is a concept of buying the US dollar to avoid risk, but it only works within legal currencies.

Eurodollar and Gold Correlation

Speaking of the Euro-Dollar, it is the currency pair with the most trading volume in the world, and it can be said that it is a currency pair that is often used to aim for a large price range with swing trades. The euro dollar has a correlation with gold. Looking at the price movements of the Eurodollar and gold, when gold rises, the Eurodollar also rises, and conversely, when the Eurodollar falls, gold also falls. The chart pattern below proves it, but you can clearly see that the same movement is occurring even if you look at the hourly time frame. It’s not completely synchronized, but it’s almost the same. The Australian dollar also tends to be linked to trends and market rates.

EUR/USD 1hour leg Tradingview 01-08-2023

GOLD 1hour leg Tradingview 01-08-2023

Correlation between dollar yen and gold

The correlation between the dollar yen and gold is exactly the opposite. When the dollar and yen rise, gold falls. In the opposite case, if the dollar yen falls, gold will rise. You can clearly see that there is an inverse correlation with the euro dollar. By looking at other currency pairs like this, you will find it easier to trade gold. If you look at the past reports and charts below, there is an inverse correlation. It can also be used as a reference for stock and other futures trading, but please note that the rules of content and direction are not necessarily guaranteed.

USD/JPY 1hour leg Tradingview 01-08-2023

GOLD 1hour leg Tradingview 01-08-2023

XM is recommended

At XM, you can not only trade gold, but also dollar yen and euro dollar. KIWAMI, an account type with even narrower spreads, has also been introduced. Therefore, it can be said that it is a highly recommended FX company for trading. Swap points will be generated when you trade across days. When placing orders, perform historical technical analysis to discover the long-term market direction. Support is also abundant. There are a lot of tools available these days, so it’s a good idea to try them out yourself. It is attracting attention.


Copied title and URL