[XM Trading: For Beginners] Cross Circle Is Difficult? USD/JPY EUR/JPY GBP/JPY AUD/JPY

Language Switcher

In the case of Japanese traders, you may have heard the word cross yen often. If you are a foreign exchange trader, you will probably hear the word cross yen many times. It is said that the cross circle is difficult, but is that true?

What is a cross circle?

A cross-yen is an exchange rate against the yen other than the US dollar, such as the euro-yen, pound-yen, Australian dollar-yen, and Swiss franc-yen. The point here is that USD/JPY, which is the dollar yen, is excluded. The cross-yen exchange rate is calculated by multiplying the US dollar currency.

dollar straight

As an aside, dollar currency pairs that do not include the yen are called dollar straights. This includes the Eurodollar and PoundDollar. The difference with the cross-yen is that the cross-yen is a currency pair against the yen, and the dollar straight is a currency pair that is not against the yen.

About cross circle correlation

The cross circles are all intertwined with circles, so they are correlated.

strength relationship

By monitoring the cross yen, you can see the relative strength of the currency.

  • USD/JPY Uptrend
  • EUR/JPY uptrend
  • GBP/JPY Downtrend

If these conditions are met, it means that the GBP is very weak right now. The relationship USD=EUR>JPY>GBP holds true. You can see the relative strength by looking at various cross circles.

relative movement

By monitoring other currencies, the cross yen market is easy to predict.

  • EUR/USD Downtrend
  • USD/JPY Downtrend

Under these conditions, EUR/JPY will fall further. This is because the relationship of JPY>USD>EUR holds true. Cross yen is a currency pair that multiplies dollar straights. Therefore, since the minus and the minus will be multiplied, more negative force will act.

The reason why the cross circle is difficult

By following various currency pairs as described above, it becomes easier to read the strength of the cross yen. However, it is said that it is quite difficult until you get used to it. This is for the following reasons.

Need to see multiple currencies

The cross-yen is a currency calculated by multiplying the dollar-yen and the dollar straight other than the Japanese yen. If you want to check the strength of the euroyen, you have to look at the eurodollar and the dollaryen. The strength of the euro yen is determined by EUR/USD x USD/JPY.

Need to look at multiple economic indicators

If you want to do GBP Yen, you need to look at economic indicators for Japan, the UK, the Euro, and the US. Since it is GBP/JPY, Japan and the UK are natural, but the euro also affects the UK, and the US also affects the pound. If the euro explodes at once in EUR/GBP, the power of GBP will drop. Similarly, if the dollar rises at once in USD/JPY, the strength of the yen will decrease relatively.

Large fluctuation range

The cross yen has a very large fluctuation range compared to USD/JPY. EUR/JPY and GBP/JPY in particular are very volatile and tend to trend often. The euro and pound move much more easily than the dollar and yen, so it can be fatal if you do not have a firm grasp of price movements.

XM is recommended

XM was originally known as a forex company with too wide spreads. But this was only recently. Now there is an account type called KIWAMI account. The spread is very narrow and very suitable for trading. Therefore, this account type is highly recommended. Especially for those who trade in pounds, it is recommended because the spread is extremely narrow.