I’ve been learning about Forex for a few months now and I keep wondering about something. When there’s a major stock market crash like what happened in 2008 or even smaller crashes, what actually happens to currency pairs?
I’m trying to understand the connection between these two markets. Do currencies become more volatile? Do people rush to certain “safe haven” currencies like the USD or JPY? And if so, which pairs should I be watching during times like these?
I’ve noticed that when the stock market has a really bad day, my EUR/USD and GBP/USD charts seem to move differently than usual. Is this just coincidence or is there actually a real relationship here?
Any insights would be really helpful. I’m still trying to wrap my head around how all these different markets influence each other.
Panic drives people to buy dollars and yen fast.
Stock crashes shake up currency markets big time. Investors dump everything for safe currencies like USD and JPY, while commodity pairs like AUD and CAD get hammered. During 2008, USD took months to really strengthen as markets corrected, but JPY shot up fast when carry trades collapsed. Volatility goes crazy during crashes. EUR/USD can swing 200-300 pips daily instead of the normal 80-120. Your charts look weird because normal correlations break down and news drives everything. Watch USD/JPY for trend changes and any CHF pairs for safe haven flows.
Been through three major crashes trading forex. That correlation you’re seeing is real, but it shifts as panic spreads.
First few days? Pure chaos. Risk currencies like AUD and NZD get crushed while everyone runs to JPY. Made solid money shorting AUDJPY during the 2020 crash.
Most traders miss the second wave. After everyone panics into safe havens, fundamentals take over. If the crash started with US problems, USD actually weakens later when the Fed cuts rates.
Volatility goes insane. I’ve watched GBPJPY move 400+ pips in one session. Massive profits if you size right, but it’ll blow accounts just as fast.
Carry trades unwind hard. Anything funded by JPY borrowing gets hammered as traders close out. EURJPY and GBPJPY turn into bloodbaths.
Best approach? Wait for initial panic to cool down, then trade the longer flows based on which central banks cut rates first.
When markets get spooked, CHF and JPY usually rocket up while EM currencies get crushed. Volatility spikes are great for scalping if you can stomach the swings.
Currency markets have patterns during stock crashes, but timing’s everything.
Money flows to safe havens initially, though USD can get hammered first if the crash starts here. It bounces back once fear spreads globally.
I watch central bank responses - their policy shifts matter way more than the crash itself. Rate cuts and stimulus drive forex prices long after stocks bounce back.
