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Euro crosses that stall while EURUSD runs

Quick observation from watching several euro charts side by side during London. When EURUSD makes a strong move, I check EURGBP, EURJPY and EURCHF before doing anything with it.

If all three are moving with EURUSD, the euro itself is being bought or sold. That's a currency move, and it tends to have more staying power because it's coming from one side of the pair with broad interest behind it.

If EURUSD is running but the crosses are flat, the move is about the dollar. That's fine too, but then I'd rather check a couple of other dollar pairs and decide whether to trade the dollar through EURUSD or through something cleaner like GBPUSD or USDJPY. Sometimes another pair is moving more cleanly for the same reason.

The case I avoid is the mixed one. EURUSD running, EURGBP up, EURJPY down. That usually means there are several flows at once and none of them dominates. Those moves tend to stall and reverse without much warning, because the participants pushing EURUSD aren't aligned.

Useful filter. From the Asian side we use a similar check with the yen crosses. If USDJPY drops and EURJPY, GBPJPY and AUDJPY all drop with it, it is a yen move, often risk related or a reaction to MoF comments, and it tends to carry. If only USDJPY moves, it is usually about Treasury yields or dollar flow, and we look at EURUSD before trusting it.

One caveat on the euro version: EURCHF can be slow even when the euro is genuinely bid, because the franc often moves with it in risk off. So two of three crosses moving is already a decent confirmation.

Timing is the tricky bit. The crosses often lag EURUSD by a few seconds to a minute because they're priced partly off the two USD legs. So in the first instant of a move the crosses can look flat even when the euro is genuinely being bought. I give it a couple of M1 candles before deciding. If the crosses still haven't moved by then, I'm fairly confident it's a dollar story. When they stay flat beyond a couple of minutes, I go straight to the other USD pairs and check whether GBPUSD or USDJPY is giving a cleaner version of the same move, with a tighter spread and less noise around levels.

News makes the read obvious. Eurozone data moves all the euro charts together, US data moves EURUSD and leaves the crosses quiet, and UK data moves EURGBP while EURUSD barely notices. Watching how the crosses react on release days is a good way to train your eye for the quieter sessions, when the source of a move isn't announced on the calendar and you have to work it out from the charts. Eurozone sessions with no data are the hardest, but the habit of checking the crosses on release days is what makes the quiet sessions readable. Over time you start recognising the signature of each kind of flow without having to think about it.

A handy shortcut if you don't want four windows is to keep a dollar index chart and a euro index chart, if your platform or charting site offers one. Comparing the two tells you which side is moving. I prefer the individual crosses, though, because the index weights can hide what's happening in the one cross you might actually want to trade. Some charting sites build these indexes from a basket of pairs with fixed weights. If one cross makes up a small share of the basket, a big move in it barely shows up in the index. That's exactly the information you'd want when deciding which pair to trade, so the index alone can mislead.

When the crosses disagree, I also watch which way they resolve. Often one of them snaps back into line with the others and the move in EURUSD either continues or fades depending on which side won. That snap is sometimes a decent short scalp on the cross itself, though spreads on EURJPY and EURCHF are wider than on EURUSD, so the target needs to be larger to make sense. It helps to wait for the cross to start moving back before entering, instead of guessing which one will snap. Targets are modest, often just the gap between where it was and where the other crosses suggest it should be, and the stop goes beyond the recent extreme. Keep the size modest on these snap trades, since the cross can just as easily drag EURUSD back instead of the other way round.