Hey everyone! I’ve been studying currency correlations and I’m trying to understand which pair moves most closely with EUR/USD. I know GBP/USD seems to follow similar patterns sometimes, but I’m not sure if that’s the strongest correlation or if there are other pairs I should be looking at.
I’m still learning about how different currency pairs relate to each other, so any insights would be really helpful. Also, if you know why certain pairs tend to correlate, that would be great to understand too.
Thanks in advance!
GBP/USD correlates strongest with EUR/USD. I’ve been tracking this for years - usually see 0.7-0.8 correlations.
Makes sense since both pairs quote against USD, and EUR/GBP tend to move together against the dollar. Similar European economic factors drive both.
AUD/USD correlates well too, especially during risk-on/risk-off moves. USD flight-to-safety hits both EUR and AUD.
But watch out - correlations shift with market conditions. Brexit completely broke the GBP/USD and EUR/USD correlation. Always check recent data instead of assuming it’s constant.
USD/CHF shows strong negative correlation. When EUR/USD rises, USD/CHF usually drops since CHF and EUR move opposite to USD.
GBP/USD follows EUR/USD closely most of the time.
AUD/USD often tracks EUR/USD closely. Risk sentiment plays a big role here. When traders are optimistic, both pairs typically rise due to their higher yields compared to USD. This correlation becomes clearer during big moves in the dollar; both pairs tend to respond similarly to shifts in USD strength or weakness.
GBP/USD tends to be the strongest, but correlations shift constantly. This video breaks down how currency pairs connect:
USD/CHF shows a strong negative correlation with EUR/USD. They tend to move in opposite directions about 80-90% of the time. When EUR/USD rises, USD/CHF usually falls. This is due to similar reactions of both CHF and EUR to USD movements. Since the Swiss National Bank closely follows ECB policy, I use this as a confirmation tool. If EUR/USD breaks higher but USD/CHF does not drop, it’s likely a sign that the EUR move is weak.
