Are EURUSD and GBPUSD correlated?

Yes — EURUSD and GBPUSD are positively correlated, typically between +0.70 and +0.90. Both pairs contain USD as the quote currency and tend to move in the same direction when USD strengthens or weakens.

What pairs are negatively correlated with EURUSD?

USDCHF has a strong negative correlation with EURUSD, typically around -0.85 to -0.95, because both pairs share the USD as the dominant driver but USD appears as base in USDCHF and quote in EURUSD.

How do I use correlation for risk management?

If you are long EURUSD and long GBPUSD simultaneously, you have effectively doubled your USD exposure. To avoid this, check correlation before opening multiple trades. Highly correlated trades count as one trade for risk purposes. Use negatively correlated pairs for hedging.

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Forex Correlation Table

Q: What is forex correlation?

Forex correlation measures how two pairs move in relation to each other, expressed as a number from +1 to -1. A correlation of +1 means pairs move identically. A correlation of -1 means pairs move in exact opposite directions. A correlation of 0 means no relationship.

By FXAbsolute · Updated May 25, 2026 · 10 min read

Forex correlation shows you whether two pairs move together or in opposite directions — and by how much. Without understanding correlation, you can unknowingly have 3 or 4 open trades that are actually just one directional bet on the dollar. This guide gives you the complete correlation matrix, explains what it means, and shows you how to use it for better risk management.

What is Forex Correlation?

Correlation is expressed as a number between +1 and -1:

+1.0 — Perfect positive correlation. Both pairs move identically in the same direction.
+0.7 to +0.9 — Strong positive correlation. Pairs usually move together.
0 to +0.3 — Weak or no correlation. Pairs move mostly independently.
-0.7 to -0.9 — Strong negative correlation. Pairs usually move in opposite directions.
-1.0 — Perfect negative correlation. Pairs move identically but in opposite directions.

      The critical rule: If you hold long EURUSD and long GBPUSD simultaneously with the same lot size, you effectively have double the USD short exposure. Both trades will win or lose together. This is a risk management trap that destroys accounts during unexpected USD spikes.
    

Full Forex Correlation Matrix — Major Pairs

Correlations below are approximate daily averages based on 2023–2026 data. Correlation changes over different timeframes and market regimes.

Pair	EURUSD	GBPUSD	USDJPY	USDCHF	USDCAD	AUDUSD	NZDUSD	XAUUSD
EURUSD	1.00	+0.85	-0.80	-0.90	-0.65	+0.72	+0.68	+0.55
GBPUSD	+0.85	1.00	-0.72	-0.82	-0.60	+0.66	+0.62	+0.50
USDJPY	-0.80	-0.72	1.00	+0.60	+0.55	-0.65	-0.60	-0.45
USDCHF	-0.90	-0.82	+0.60	1.00	+0.58	-0.70	-0.65	-0.52
USDCAD	-0.65	-0.60	+0.55	+0.58	1.00	-0.80	-0.72	-0.48
AUDUSD	+0.72	+0.66	-0.65	-0.70	-0.80	1.00	+0.92	+0.60
NZDUSD	+0.68	+0.62	-0.60	-0.65	-0.72	+0.92	1.00	+0.55
XAUUSD	+0.55	+0.50	-0.45	-0.52	-0.48	+0.60	+0.55	1.00

Color key: Dark green = strong positive (+0.8+) Light green = moderate positive Pink = moderate negative Red = strong negative (-0.8+)

Key Correlation Pairs to Know

Strongest Positive Correlations

Pair A	Pair B	Correlation	Why
AUDUSD	NZDUSD	+0.92	Both commodity/risk currencies, adjacent geography
EURUSD	GBPUSD	+0.85	Both USD quote pairs in same economic region
EURUSD	AUDUSD	+0.72	Both USD quote pairs, risk sentiment driven

Strongest Negative Correlations

Pair A	Pair B	Correlation	Why
EURUSD	USDCHF	-0.90	USD is opposite side in both pairs; same region
EURUSD	USDJPY	-0.80	USD strengthens both but appears on opposite sides
AUDUSD	USDCAD	-0.80	Both oil/commodity pairs but USD on opposite sides

Practice Correlation-Aware Risk Management on FXAbsolute

Use FXAbsolute to backtest with multiple pairs open simultaneously. See how correlated positions affect your real P&L during trending USD moves on 5 years of historical data.

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How to Use Correlation for Risk Management

Rule 1: Count Correlated Trades as One

Scenario: You have 3 open trades at 1% risk each: long EURUSD, long GBPUSD, long AUDUSD.

On paper: 3 trades × 1% = 3% total risk exposure.
In reality: all three pairs have strong positive correlation (+0.7 to +0.85). When USD spikes, all three stop out simultaneously.
Actual risk: approximately 3% in a single adverse USD move.

Better approach: pick ONE of the three pairs as your best setup and trade only that one for the USD exposure you want.

Rule 2: Use Negative Correlation for Hedging

Scenario: You have a long-term long EURUSD position (1.0 lot, multi-day hold).
You want to reduce overnight USD risk without closing the trade.

Hedge option: Open a small long USDCHF position (0.5 lot) — correlation -0.90 means USDCHF will rise when EURUSD falls, partially offsetting your exposure.

Note: Hedging has a cost (spread, carry). Always calculate the full cost before placing a hedge.

Rule 3: Use Correlation to Confirm Signal Strength

When EURUSD, GBPUSD, and AUDUSD are all setting up a similar bearish signal at the same time, it indicates broad USD strength. The signal is more reliable because multiple correlated pairs confirm the same directional pressure.

Correlation Changes Over Time

Correlation is not fixed. It shifts based on:

Timeframe — EURUSD and GBPUSD may be +0.90 correlated daily but only +0.60 intraday (M5–M15)
Market regime — during crisis events (COVID, bank failures), correlations compress as all risk assets move together
Central bank divergence — when BoE hikes while ECB holds, EUR and GBP decouple despite their usual +0.85 correlation
Lookback period — 30-day correlation can differ significantly from 90-day or 1-year correlation

      Practical rule: Always use recent correlation data (last 30 days) rather than long-term averages. The table on this page shows typical values, but verify them before making major risk management decisions.
    

Frequently Asked Questions

What is forex pair correlation?

Correlation measures how two forex pairs move in relation to each other, from +1 (identical moves) to -1 (exact opposites). Understanding correlation prevents unintentional doubling of risk exposure.

Are EURUSD and GBPUSD positively correlated?

Yes — typically +0.80 to +0.90. Both pairs have USD as the quote currency, so they both react strongly to USD strength/weakness events.

What pair is most negatively correlated with EURUSD?

USDCHF has the strongest negative correlation with EURUSD, typically around -0.88 to -0.95, because USD appears as base in USDCHF and quote in EURUSD within the same European currency region.

How does correlation affect backtesting?

When backtesting multiple pairs, account for correlation when counting simultaneous open trades. If you test EURUSD and GBPUSD as separate strategies, your actual risk during correlated moves is double what your single-pair stats suggest.

Test Multi-Pair Strategies on Real Historical Data

FXAbsolute gives you GBPUSD, USDJPY, and XAUUSD — pairs with varying correlation profiles. Practice managing correlation risk in backtesting before risking real money.

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