crosses pairs
Crosses pairs are the pairs that do not contain the US dollar such as EUR/GBP
It consists of the product of two pairs, EUR/USD and GBP/USD.
To make it more clear, we can assume the following example:
If strong economic data comes out of Australia, to support the Australian dollar you may want to buy the Australian dollar.
Your first reaction may be to buy AUD/USD, but what if at the same time recent data also shows that the US is experiencing strong economic growth? AUD/USD price movement may be flat.
One of your options is to match the Australian dollar to the currency of an economy that is not doing well. What can you do?
Let's say you do some analysis and notice that the Japanese economy is not doing well now, of course you would jump for this opportunity and go buy AUD/JPY.
In the below chart, notice the relative strength of the AUD/JPY pair against the AUD/USD.
But you are not limited to these currency pairs only, you can compare the Australian dollar against such as the euro, the pound sterling, the Canadian dollar and so on, where you can search for the weakest currency to trade against.
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Crosses pairs are the pairs that do not contain the US dollar such as EUR/GBP
It consists of the product of two pairs, EUR/USD and GBP/USD.
To make it more clear, we can assume the following example:
If strong economic data comes out of Australia, to support the Australian dollar you may want to buy the Australian dollar.
Your first reaction may be to buy AUD/USD, but what if at the same time recent data also shows that the US is experiencing strong economic growth? AUD/USD price movement may be flat.
One of your options is to match the Australian dollar to the currency of an economy that is not doing well. What can you do?
Let's say you do some analysis and notice that the Japanese economy is not doing well now, of course you would jump for this opportunity and go buy AUD/JPY.
In the below chart, notice the relative strength of the AUD/JPY pair against the AUD/USD.
But you are not limited to these currency pairs only, you can compare the Australian dollar against such as the euro, the pound sterling, the Canadian dollar and so on, where you can search for the weakest currency to trade against.
If you benefited from the publication, click like to continue publishing educational publications