USDCHF: the mirror that isn't perfect

[Shadow Trader]

USDCHF often looks like EURUSD flipped upside down. When the euro rises against the dollar, the franc tends to rise too, so USDCHF falls. The correlation has historically been strongly negative.

Scalpers use this in two ways. As confirmation: a short signal on USDCHF aligned with a long on EURUSD points to broad dollar weakness. And as a diversification check: holding both a long EURUSD and a short USDCHF is mostly the same trade.

But the mirror has cracks. The Swiss National Bank influences the franc, risk-off flows hit the franc differently from the euro, and Swiss data shifts the pair independently. On days when the correlation weakens, a trade built on the assumption of a perfect mirror gets exposed.

Spreads on USDCHF are often wider than on EURUSD, which adds to the cost of using it as a second leg.

A quick check of the rolling hourly correlation before relying on the mirror, rather than the long-term average, keeps the assumption honest.

What does the one-hour correlation between EURUSD and USDCHF look like today?