[XM Trading: For Beginners] Correlation between Euro Dollar (EUR/USD), Dollar Yen (USD/JPY) and Gold (GOLD)

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It may be a recommended article for those who want to trade from now on. Gold trading tends to go hand in hand with the forex market. Therefore, since there is a correlation, it is very easy to do when combined with EURUSD and USDJPY.

The US dollar is the world’s key currency

The US dollar is the world’s key currency. The most valuable legal currency is the US dollar. So the US economic data hits all currency pairs. Therefore, the US dollar is sold when an emergency occurs in the United States, but the dollar tends to be bought when the market and political situation are stable. Also, even if it is not as much as gold, when the world is in an unstable situation, the number of people who buy US dollars tends to increase.

Gold is risk averse

On the other hand, gold is characterized by the fact that many people want to hold it for risk aversion more than the US dollar. Many people buy gold instead of US dollars when there is a war or when the economy is not good. Since gold is a physical asset, it will not disappear, so people want to hold onto gold when they feel uneasy. Therefore, when anxiety spreads, gold tends to be bought and the US dollar tends to be sold. There is also risk aversion buying the US dollar, but it is a story in the legal currency that works.

Eurodollar and Gold Correlation

Speaking of EURUSD, it can be said that it is a currency pair with the highest trading volume in the world, and it is a currency pair that often aims for a large price range in swing trade. Such a euro dollar is correlated with gold. Looking at the price movements of EURUSD and gold, if gold goes up, EURUSD will go up, and conversely, if EURUSD goes down, gold will go down. The chart pattern below proves it, but you can see that it is doing the same movement even if you look at the hourly chart. It’s not completely synchronized, but it’s almost the same.

EUR/USD 1hour leg Tradingview 01-08-2023

GOLD 1hour leg Tradingview 01-08-2023

Correlation between dollar yen and gold

The correlation between dollar yen and gold is the opposite relationship. When the dollar yen rises, gold falls. In the opposite case, if the dollar yen falls, gold will rise. You can clearly see that it is inversely correlated with the EURUSD. By looking at other currency pairs like this, you will find that trading gold becomes easier.

USD/JPY 1hour leg Tradingview 01-08-2023

GOLD 1hour leg Tradingview 01-08-2023

XM is recommended

At XM, you can trade not only gold, but also USD/JPY and EURUSD. In addition, KIWAMI, an account type with narrow spreads, has also appeared. Therefore, it can be said that it is a highly recommended Forex company for trading.