Currency Strength: Picking the Right Side of the Trade

Most traders look at a forex pair as one thing. EURUSD is going up. GBPJPY is going down. But every pair is actually two currencies, and the move you see is the strong one outrunning the weak one. Currency strength makes that explicit.

What the score measures

For each of the eight major currencies (USD, EUR, GBP, JPY, AUD, NZD, CAD, CHF) we calculate a relative strength score based on how that currency is performing against every other major it trades with, across the selected timeframe.

The score is normalised so that the strongest currency sits near +100 and the weakest near -100. Everything else falls in between.

A score of +60 means this currency is decisively winning against the field. A score of -60 means it is decisively losing. A score near zero means it is moving roughly in line with the other majors, neither leading nor lagging.

Why this is more useful than watching pairs

The forex market traded roughly $7.5 trillion per day in spot, forward and swap volume in the most recent BIS Triennial Survey (2022). All of that flow moves through pairs, but the underlying decision is almost always made at the currency level — central banks set rates on a currency, hedge funds run a long-USD or short-JPY thesis, exporters need to convert one currency to another. Reading the screen in pairs when the real decision is happening in currencies is one of the most common analytical mistakes retail traders make.

Picture EURUSD and GBPUSD both rising 0.4% in the last hour. Is that euro and pound strength, or is it dollar weakness? The pair chart cannot tell you. The strength view can:

• If USD is at -45, EUR at +20, GBP at +15: the dollar is selling off and everyone is benefitting. The cleaner trade is short USD against the strongest counter currency, not arbitrarily picking EUR or GBP.
• If USD is at -10, EUR at +50, GBP at +35: this is genuine euro and pound strength, with the dollar barely involved. EURGBP might be more interesting here than either pair against USD.

The strongest-against-weakest pair is almost always the cleanest move on the board. The platform highlights it for you on the currency strength page as the "strongest divergence."

How to use it

Pick a pair, do not start with one

Before deciding what to trade, look at the strength board for the timeframe you care about. Pick the strongest currency. Pick the weakest. The pair that puts those two against each other is where the cleanest trend usually sits.

If the strongest is EUR and the weakest is JPY, EURJPY is your starting point. If the strongest is the base currency in the pair, you want longs. If it is the quote, you want shorts.

Use the right timeframe

Switch between timeframes depending on your style:

• Day trader: 1-hour and 4-hour scores. They flip more often, but they tell you who is winning right now.
• Swing trader: daily and weekly scores. They are slower to change, but a currency that has been strong for a week is usually still strong tomorrow.
• Position trader: weekly and monthly scores. These often line up with macro themes (rate differentials, growth, risk appetite).

Confirm against the trends grid

Strength tells you who is winning. The trends grid tells you whether the win has translated into a clean trend on the pair you are eyeing. When both agree, you have something. When strength says one thing and the grid says another, the move is fresh and may not last.

What the score is not

It is not a forecast. A currency that is at +70 right now can be at -30 by the end of the week. It is a snapshot of who is winning, scored against a moving field. Use it for the next trade, not for the next quarter.

It also assumes the majors move against each other in a more-or-less zero-sum way, which is true most of the time but breaks down in extreme risk-off events where everyone runs to USD and JPY simultaneously. In those moments the strength numbers will still be directionally correct, but the absolute values can look dramatic.