Cross Rates Euro/Dollar. Working with Major Currency Pairs

Using Cross-Currency Pairs to Optimize Trading Decisions

Even if you trade exclusively with major currency pairs, cross-currency pairs can be a key tool for enhancing your trading strategies. Let’s explore how analyzing cross-currency pairs can improve your decision-making, using the EUR/USD pair as an example!

Example: Analyzing EUR/GBP

 

Cross-currency pairs help identify the relative strength of major currency pairs.

 

Imagine you’ve spotted buy signals for both EUR/USD and GBP/USD but only want to execute one trade.

 

How do you decide which pair to trade?

 

Instead of relying on random choices like flipping a coin, you can analyze cross-currency pairs. For instance, focus on the EUR/GBP pair:

•If the EUR/GBP rate is falling, it indicates that the pound is stronger than the euro.

 

In this case, the smart move would be to buy GBP/USD, as the pound’s relative strength is higher.

 

Why does this matter?

 

Even if the euro strengthens against the US dollar, the pound is likely to perform even better due to its greater relative strength.

 

As a result, buying GBP/USD would be a more profitable strategy compared to EUR/USD.

Applying the Approach to Other Major Pairs

 

This method can also be applied to other currency pairs.

 

For example, if you predict the US dollar will weaken, how do you decide which trade to prioritize?

1.Unsure whether to buy EUR/USD or sell USD/CHF?

•Analyze the EUR/CHF pair to determine which currency is stronger.

2.Debating between buying USD/CHF or USD/JPY?

•Check the cross CHF/JPY for insights.

3.Considering buying EUR/USD or selling USD/JPY?

•Review the EUR/JPY pair for clarity.

4.Torn between buying GBP/USD or selling USD/CHF?

•Study the GBP/CHF pair.

5.Deciding whether to buy GBP/USD or sell USD/JPY?

•Investigate the GBP/JPY cross.

Cross-Currency Pairs: A Valuable Analysis Tool

 

Analyzing cross-currency pairs allows you to better understand the relative strength of currencies and choose the most profitable trading pairs. This approach not only refines your strategy but also opens new opportunities to increase profitability.

 

So, the next time you’re ready to trade, consider checking cross-currency pairs. It will help you make confident decisions and trade more effectively! 🚀