Only watching the dollar/yen will make you miss it? The “cross currencies” reveal the market’s true trend

If you only watch USD/JPY you might miss it? The Cross Yen will reveal the market's true direction

When you start FX trading, many people focus on the USD/JPY chart to monitor the market.

Of course, USD/JPY is the most familiar currency pair for Japanese traders.

However, to understand the overall currency market, it is also important to pay attention to the cross yen.

Cross yen refers to currency pairs that pair the Japanese yen with other currencies without going through the US dollar.

For example, EUR/JPY, GBP/JPY, AUD/JPY are representative.

So, why is cross yen important?

The reason is that it allows you to read the flow of funds across the entire market.

For instance, even if USD/JPY is rising, if EUR/JPY and GBP/JPY are simultaneously rising significantly, there is a possibility that “the yen itself is being sold.”

On the other hand, if only USD/JPY rises and other cross yen pairs show little movement, it is possible that “only the dollar is being bought strongly.”

In other words, there are times when you cannot accurately determine the reason for price movement by looking at USD/JPY alone.

By looking at cross yen, you can see the difference between “yen depreciation” and “dollar strength.”

For example, suppose there is news about Bank of Japan monetary policy.

If that news leads to yen selling across the board, not only USD/JPY but EUR/JPY and GBP/JPY are likely to rise as well.

Conversely, if US economic data is strong and only the dollar is bought, USD/JPY may rise while the response of EUR/JPY could be limited.

Understanding this difference greatly improves the accuracy of market analysis.

In today’s market, many factors such as global monetary policy, economic indicators, and geopolitical risks are intricately intertwined.

Therefore, it is important not to look at a single currency pair, but to compare multiple currency pairs and monitor the overall market.

Professional traders also check multiple cross yen pairs simultaneously, not just USD/JPY, to gauge the market's overall direction.

In fundamental analysis, it is essential to have the perspective of “which currencies are being bought and which are being sold.”

Cross yen is a very important source of those clues.

When analyzing USD/JPY in the future, please also check the movements of EUR/JPY, GBP/JPY, and AUD/JPY.

If you develop the habit of comparing multiple currency pairs, the context of news and market sentiment will appear more three-dimensionally.

Today as well, investors around the world are predicting the next market not only with USD/JPY but also by referring to cross yen movements.

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