Correlation Between Forex Pairs In forex trading, correlation refers to the relationship between two currency pairs and how they move in relation to each other. A positive correlation means both pairs move in the same direction, while a negative correlation means they move in opposite directions. Types of Correlation: 1. Positive Correlation – Pairs like EUR/USD and GBP/USD tend to move together because both are often affected by the US dollar. 2. Negative Correlation – Pairs like EUR/USD and USD/CHF usually move in opposite directions since the Swiss franc often strengthens when the US dollar weakens. Why Correlation Matters: Helps traders diversify their positions and reduce risk. Prevents overexposure to the same market move. Can be used for hedging strategies to protect against losses. Traders often use correlation coefficients (ranging from -1 to +1) to measure the strength of the relationship between pairs. A value close to +1 indicates strong positive correlation, while a value near -1 suggests strong negative correlation. #firstdealofthenewyear-Bronz