It can be difficult to assess the performance of a single currency. Think about the Euro/US Dollar currency pairs (EURUSD). Is it because the EUR is doing well or because the USD is not performing well that it has gained so much?
This is different from a currency index. The US Dollar Index is an example of a weighted index that compares the Dollar's value to a basket currency. At the time this article was written, the US Dollar Index is weighted as:Euro 57.6%.Yen 13.6%. British Pound 11.9%. Canadian Dollar 9.1%. Swedish Krona 4.2%. Swiss Franc 3.6%.
This Forex indicator will show you which currencies are strong at any given time and how they are moving in a matrix. You will be able to trade profitably by using a currency strength meter.
The meter reads every forex pair for the past 24 hours and then applies calculations to each. The meter then combines all the pairs into a single currency (e.g. EUR/USD or GBP/USD), USD/JPY or EUR/GBP etc. and determines the current strength.
As a complete strategy, the Forex Currency strength Meter can be used in combination with support or resistance indicators to produce better results.
Because there is such high correlation between the currencies, it is easy to assume that the GBP (the currency common between the pairs) drives these movements. Therefore, the GBP is the strongest currency.
The currency strength meter calculates the strength of all pairs that contain USD to determine the strength of USD. USDJPY, EURUSD, GBPUSD, AUDUSD, etc.) Then, add all of these calculations together to get the overall result for USD.
This is different from a currency index. The US Dollar Index is an example of a weighted index that compares the Dollar's value to a basket currency. At the time this article was written, the US Dollar Index is weighted as:Euro 57.6%.Yen 13.6%. British Pound 11.9%. Canadian Dollar 9.1%. Swedish Krona 4.2%. Swiss Franc 3.6%.
The broad USD index, which includes a greater number of currencies, is a less well-known, but nonetheless more comprehensive measure. Both are similar in their approach. They combine the exchange rates of both countries into one number, then apply a weighting to each currency. The trade weighting that is applied to the broad index is derived using trade data. This refers to the amount of merchandise imported in annual bilateral trade with America.
It monitors our forex data in real-time every minute and determines current strength. Refresh the page to see any changes.
Currency pairs are one of the key features of Forex (FX), which makes it different from other financial markets. FX positions give you exposure to two currencies. This gives you many options, such as the ability to compare one currency's strength with another.
This is a useful tool to help you decide which currencies are worth trading and which ones to avoid. You might find a trading opportunity if one currency is extremely strong and the other suddenly becomes weaker. This is known as momentum. If two currencies are weak or strong, or have average strength, it is likely that there is a range of movement or sideways movement. These pairs are not recommended for trading.
A currency strength meter, in simple terms, is a visual guide which shows which currencies have the most strength and which ones have the least. Currency strength indicators take into account the exchange rates of different currencies pairs to give an aggregate, comparable strength. Simple meters don't need to use weighting, but more advanced meters can apply their own weightings. You can even combine them with other indicators to give trading signals.
The GBP is the quotation currency in the first pair. This means that long trades expect the EUR's strength against the GBP. The GBP is the base currency in the second pair. This means that long trades expect the GBP against the USD to strengthen. A long trade in EURGBP means that it expects that the GBP will weaken. However, a long trading in GBPUSD would expect that the GBP will strengthen.