Correlation

In the language of statistical correlation - a correlation between the two units, calculated for a certain period of time. Correlation coefficients measured in: from -1 (perfect negative correlation) to 1 (perfect positive correlation). A positive correlation implies that the two units move in one direction, the greater the correlation, the more clearly and accurately traced the data traffic. Conversely, a negative correlation represents a reversal, where the ratio of two units expressed by a movement in opposite directions.

It is important to understand that the online Forex trading currency market you are buying or selling the currency pair as a single unit. A pair consists of two different currencies, and their price is based on the price of one currency divided by the price of another. Technically, you are making two trade deals when trading in Forex. You buy one currency and at the same time selling another. It is therefore logical to consider buying and selling currency pairs, as two parallel transactions.

If compare some of the most popular currency pairs on Forex, you would immediately notice the similarity in their trajectory. Eg., EUR / JPY and EUR / USD /

There is a simple explanation: in both pairs you buy Euros and sell the other currency.