Which forex pairs move together right after important news?

USD/JPY and USD/CHF are two currency pairs that are inversely correlated because they are both safe-haven currencies. When there is a significant economic event that causes market uncertainty and volatility, investors tend to flock to safe-haven currencies such as the Japanese Yen and the Swiss Franc. Evaluate the short-term impact of the remaining headlines (B and C) on specific currency pairs. The U.S. dollar extended its downward trend in April, weakening a further 8.5% year-to-date. The initial estimate of Q1 GDP showed a contraction of 0.3%, as businesses and consumers rushed to frontload imports ahead of new U.S. tariffs.

Before we delve into the specific forex pairs that move together after important news, it’s essential to understand the concept of correlation. In forex trading, correlation refers to the degree of similarity between two or more currency pairs. If two currency pairs tend to move in the same direction, they are considered to be positively correlated, while if they tend to move in opposite directions, they are called inversely correlated.

As always, currency markets are dynamic—and May’s developments underscore the importance of staying informed. Xe remains committed to helping you navigate volatility with expert insights and real-time rates. While the long-term trajectory for the yen remains upward amid global uncertainty, the next move will likely be driven by bond market trends and risk sentiment. The NZD similarly faced volatility, dropping to a five-year low before recovering on improved U.S. trade sentiment. With the RBNZ expected to cut rates again, the NZD may struggle to hold gains without stronger economic support.

The U.S. dollar (USD) remains under pressure, while fiscal stimulus in Europe and resilient domestic demand in select emerging markets are creating new dynamics in the global foreign exchange landscape. In conclusion, forex pairs tend to move together after important news due to their correlation, which is a measure of similarity between two or more currency pairs. The degree of correlation varies depending on the underlying economic, political, and other factors that affect each currency pair. Traders should be aware of the correlation between different currency pairs and adjust their trading strategies accordingly to manage their risk and maximize their profits.

These negotiations will be critical in shaping the pound’s direction over the coming months. The PBoC is expected to ease monetary policy further in 2025, and while USD/CNY is likely to remain range-bound, the bias is toward the lower end of its recent range as the forex broker listing USD weakens.

Compare the direct impact of Headline B (Hong Kong Dollar Peg) on USD/HKD with the indirect impact of Headline C (U.S. Stocks Sink) on various USD pairs. Headline B has a more direct and significant short-term impact on a specific currency pair. The euro (EUR) has been one of the strongest performers this spring, rising 10% over the past two months.

Step 2: Assess Short-Term Currency Impact

Headline (b), the US stock market decline due to a surprise Fed interest rate hike, is most likely to significantly move the currency pair in the short term. However, uncertainty around future rate cuts from the RBA and concerns over China’s slowdown are limiting further upside. China’s yuan (CNY) has remained relatively stable in recent months despite escalating etoro broker review U.S.-China trade tensions. Beijing continues to tightly manage the currency, even as economic activity slows and inflation remains in negative territory.

EUR/USD and GBP/USD

Forex trading is a dynamic and ever-changing market, where currency pairs move in response to various economic events, political developments, and other factors. In this article, we will explore which forex pairs tend to move together right after important news and why. As global markets continue to react to geopolitical tensions, fiscal policy shifts, and evolving central bank decisions, May has brought a sharp pivot in sentiment across major currencies.

JPY: Gains Pause as the BoJ Holds Rates

Now let’s take a closer look at which forex pairs tend to move together after important news. The following pairs are known for their high degree of correlation and are likely to move in the same direction after significant economic events. Headline A (Pharma Price Hikes) is excluded due to its limited impact on currency markets.

b. U.S. Stocks Sink on Fed’s Surprise Increase of Interest Rate

This soft growth data, combined with an uncertain policy response from the Federal Reserve and a lack of clarity around job cuts and inflation control, has weighed heavily on USD sentiment. While concerns around the USD losing its status as a global reserve currency have emerged in some circles, these fears remain largely unfounded. The dollar still commands a 57.8% share of global currency reserves, well ahead of the euro and yen. AUD/USD and NZD/USD are two currency pairs that avatrade review are positively correlated because they are both commodity currencies.

The Euro and the British Pound are positively correlated because they are both part of the European Union, and their economies are closely intertwined. Correlation is measured on a scale from -1 to +1, where -1 indicates a perfect inverse correlation, +1 indicates a perfect positive correlation, and 0 indicates no correlation. Understanding the correlation between different currency pairs is crucial for risk management and portfolio diversification in forex trading.

Australia and New Zealand are major exporters of commodities such as gold, silver, and oil, and their currencies tend to move in tandem with commodity prices. Therefore, if there is a significant event that affects commodity prices, such as an OPEC meeting or a change in the US oil inventory, both AUD/USD and NZD/USD are likely to move in the same direction. USD/CAD declined by 4% in April, supported by improving domestic sentiment and resilient export demand—even as U.S. tariffs weighed on Canadian manufacturing. Canada’s unemployment rate rose to 6.7% in March, and the Bank of Canada is considering a rate cut in June. Further moves in USD/CAD will depend largely on progress in U.S.-Canada trade negotiations. EUR/USD and GBP/USD are two of the world’s most widely traded currency pairs, and they tend to move in the same direction most of the time.

• Compare the direct impact of Headline B (Hong Kong Dollar Peg) on USD/HKD with the indirect impact of Headline C (U.S. Stocks Sink) on various USD pairs.
• Correlation is measured on a scale from -1 to +1, where -1 indicates a perfect inverse correlation, +1 indicates a perfect positive correlation, and 0 indicates no correlation.
• Headline A (Pharma Price Hikes) is excluded due to its limited impact on currency markets.
• The euro (EUR) has been one of the strongest performers this spring, rising 10% over the past two months.

• Before we delve into the specific forex pairs that move together after important news, it’s essential to understand the concept of correlation.
• The Euro and the British Pound are positively correlated because they are both part of the European Union, and their economies are closely intertwined.
• Australia and New Zealand are major exporters of commodities such as gold, silver, and oil, and their currencies tend to move in tandem with commodity prices.
• With the RBNZ expected to cut rates again, the NZD may struggle to hold gains without stronger economic support.

A major tailwind has come from the European Union’s announcement of a €500 billion defense spending package—equivalent to 3.8% of Eurozone GDP. This fiscal push, alongside improved manufacturing data and capital inflows from the U.S., has fueled optimism for the euro. Mexico’s peso (MXN) rebounded strongly in late April after a temporary surge in USD/MXN triggered by new U.S. tariffs. Mexico’s low unemployment, stable inflation, and ongoing trade negotiations with the U.S. have all helped restore confidence in the currency. Xe combines bank-beating rates, secure transfers, and global reach to make moving money across borders fast, easy, and affordable. The Bank of Japan left interest rates unchanged and downgraded its growth and inflation forecasts, prompting a modest reversal in USD/JPY.

USD/CAD and USD/MXN are two currency pairs that are positively correlated because they are both linked to the US economy. Canada and Mexico are the two largest trading partners of the United States, and their currencies tend to move in the same direction as the US Dollar. Therefore, if there is a significant economic event that affects the US economy, such as a change in interest rates or a major employment report, both USD/CAD and USD/MXN are likely to move in the same direction.