Currency strength meters: handy, but handle with care
Posted: Fri Oct 30, 2026 7:50 am
Strength meters rank the eight major currencies by recent performance against the others, usually shown as bars or a table. The appeal is obvious: buy the strongest against the weakest.
The logic is sound in a limited way. Pairing a strong currency with a weak one often gives cleaner trends than pairing two similar ones. It's a decent way to filter a long list of pairs.
The weaknesses are lag and sensitivity to settings. Most meters average moves over a window, so they confirm strength after it has appeared. By the time one currency tops the table, much of the move may be done. Different meters weight pairs differently, so two tools can disagree.
Another problem is that a meter says nothing about levels or timing. A strong currency can be sitting at resistance.
A reasonable use is as a morning screen, shortlisting pairs, then using price action for the actual entry.
Has a strength meter been tested against a simple baseline, such as picking pairs at random?
The logic is sound in a limited way. Pairing a strong currency with a weak one often gives cleaner trends than pairing two similar ones. It's a decent way to filter a long list of pairs.
The weaknesses are lag and sensitivity to settings. Most meters average moves over a window, so they confirm strength after it has appeared. By the time one currency tops the table, much of the move may be done. Different meters weight pairs differently, so two tools can disagree.
Another problem is that a meter says nothing about levels or timing. A strong currency can be sitting at resistance.
A reasonable use is as a morning screen, shortlisting pairs, then using price action for the actual entry.
Has a strength meter been tested against a simple baseline, such as picking pairs at random?