Euro and yen cross
In addition to the US dollar, the euro and the yen are the most frequently traded currencies. At the same time, like the US dollar, some countries also hold euros and yens as their foreign exchange reserves. Therefore, the yen and yen cross currency pairs have become the most liquid currency pairs outside of the direct dollar.
Trading Euro currency pairs
The most common Euro cross currency pairs are EUR/JPY, EUR/GBP and EUR/CHF.
The news has a much greater impact on the Euro or Swiss franc cross than on the euro/dollar or US dollar/Swiss franc.
British news will also have a big impact on the euro/sterling.
Strangely, news from the United States will also have a greater impact on the cross movement of the euro. US news will have a strong impact on GBP/USD and USD/CHF. This will affect not only the exchange rate of the British pound and Swiss franc against the US dollar, but also the exchange rate of the British pound and Swiss franc against the euro.
The strengthening of the US dollar may promote the strengthening of the euro/Swiss franc and the euro/sterling, and the weakening of the US dollar may also promote the weakening of the euro/Swiss franc and the euro/sterling.
Confused? Okay, let’s elaborate separately.
For example, the positive economic data released by the United States led to a stronger dollar. This means that the pound/dollar will fall, which in turn will suppress the pound’s decline. At the same time, the USD/CHF will go higher, which will also suppress the CHF’s decline.
The fall in the British pound will cause the euro/pound to rise, because traders are selling the pound.
The Swiss franc’s decline will also cause the Euro/Swiss franc to rise, as traders are selling the Swiss franc.
On the contrary, if the economic data released by the United States is negative, it may cause the corresponding currency pair to fluctuate in the opposite direction.
Trading yen cross
The Japanese yen is also one of the most popular currencies for traders. The Japanese yen can basically be traded with all major currencies.
As of February 2010, the trading volume of the euro/yen in the yen cross reached the highest level.
GBP/JPY, AUD/JPY, NZD/JPY are also attractive arbitrage trading currencies, because the spread between these currencies and the yen is the largest.
When trading cross yen, you should always pay attention to USD/JPY. When the USD/JPY breaks through the key price, the yen crossover will also be significantly affected.
For example, if the USD/JPY breaks through a key resistance level, it means that the trader is selling the yen. This may prompt them to sell the yen against other currencies at the same time. Therefore, you should expect the euro/yen, pound/yen and other yen cross currency pairs to also go lower.
In recent years, the Canadian dollar/yen has become a very popular cross currency pair, and the correlation between the currency pair and oil prices is also very high.
Canada has the second largest oil reserves in the world, and the country has benefited a lot from rising oil prices.
On the other hand, Japan is heavily dependent on oil imports. In fact, 99% of Japan’s crude oil is imported because there is almost no natural oil reserves in the country.
These two factors have led to a positive correlation of 87% between oil prices and the Canadian dollar/yen.