A systematic way to read currency strength through cross-pair interactions
The Multi-Cross Forex Matrix is a reference map that provides, at a glance, the relative strength and weakness among multiple currency pairs. A practical legend that simplifies market reading and allows for quick, structured analysis of the main forex crosses.
Note : The strength relationships do not change, for visual simplicity and immediacy, JPY/USD has been used instead of USD/JPY.
Example of how to read the table:
- EUR/USD up; AUD/USD up = EUR/AUD sideways (both EUR and AUD are strong against USD)
- EUR/USD up; AUD/USD down = EUR/AUD up (EUR is strong against USD, while AUD is weak against USD)
- EUR/USD down; AUD/USD up = EUR/AUD down (EUR is weak against USD, while AUD is strong against USD)
- EUR/USD down; AUD/USD down = EUR/AUD sideways (both EUR and AUD are weak against USD)
Observation :
When looking at AUD/JPY in relation to AUD/USD and JPY/USD, the strength relationships are straightforward.
However, when viewed in relation to EUR/AUD and EUR/JPY, the interpretation requires more attention, as less obvious relative strength dynamics emerge.
Leaving aside the sideways relationships, which are obvious, let’s look at points 2, 3, 6 and 7:
2. EUR/AUD sideways; EUR/JPY up = AUD/JPY up
(the neutrality of EUR/AUD + strengthening of EUR against JPY, and thus the weakening of JPY against EUR, makes JPY weak on AUD/JPY)
3. EUR/AUD up; EUR/JPY sideways = AUD/JPY down
(strengthening of EUR against AUD, and thus the weakening of AUD against EUR, makes AUD weak on AUD/JPY + neutrality of EUR/JPY)
6. EUR/AUD sideways; EUR/JPY down = AUD/JPY down
(the neutrality of EUR/AUD + strengthening of JPY against EUR, and thus the weakening of EUR against JPY, makes AUD weak on AUD/JPY – in short, JPY leads and drives AUD/JPY lower)
7. EUR/AUD down; EUR/JPY sideways = AUD/JPY up
(the neutrality of EUR/JPY + strengthening of AUD against EUR, and thus the weakening of EUR against AUD, makes AUD strong on AUD/JPY – in short, AUD leads and drives AUD/JPY higher)