You have no items in your cart.
Q: Do currency crosses have the ability to drive major pairs?
Question:
Do currency crosses have the ability to drive major pairs? How do you know if the cross price action is dependent or independent of the underlying currency involved?
Got a Question? Send it in!
Answer:
Yes! Currency crosses DO have the ability to drive movements in the majors and this is particularly true for the Japanese Yen crosses. There could be a situation where traders are dumping everything related to the “Yen” including EUR/JPY for example and if the sell-off is strong enough, it will also drive the EUR/USD lower. Currency crosses can also drive the movements in the majors when there are large merger and acquisition transactions that require a currency conversion. For example, if an Australian company decides to invest in or buy a Canadian company, that will involve a large conversion of Australian dollars into Canadian dollars. When that occurs the big move will be in AUD/CAD but we can also see the transaction drive the AUD/USD and USD/CAD lower.
**Stops can be subject to slippage by your broker
Got a Question about Forex? Ask Us.
We will post our Answer to 1 or 2 Questions Every Single Day
Just fill out the form below and we will pick 1 or 2 questions to answer per day and post the responses on our website.
*Please note, we CANNOT comment on your individual trades. We can only provide general advice.