Good day forex traders.
Welcome to another correlation report of the EUR/USD and S&P 500. The S&P 500 and EURUSD has shown historically that it is rather correlated due to the similarities of the underlying economy. Personally i use this pair of financial instruments to have a gauge of the underlying sentiments.
Looking at 3 months of the chart in respect of the EUR/USD ( Orange ) and S&P 500 ( Blue ), we note that as per mentioned before, there is some correlation. However due to the different nature of financial instruments, the volatility is not similar.
As we further review, we note that the peaks and dips are often corresponding. Having said so, due to the year end holidays the currency exchange market is getting minimal volume and hence the EUR/USD is somewhat flat compared to the S&P 500 which received some uplift.
Using the above as a guide, we may be seeing a catch up by the EUR/USD to the upside soon when volume returns provided if the correlation stays true and the S&P 500 remains.
Do remember that the above serves only as a guide and it is crucial that you need to consider this among other analysis.
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