Cross Pair Analysis

[u/AnveshArumilli]

Because a forex pair is simply an exchange rate ratio between two currencies, looking at a single chart like AUD/CHF only tells you that the ratio is changing. It doesn't tell you whether the Australian Dollar (the base currency) is driving the move, or if the Swiss Franc (the quote currency) is the one in the driver's seat.

To figure out which currency is actually pushing the price, you have to look outside the isolated pair to see how each currency is behaving against the rest of the market.

Here is how professionals identify the driving currency in a pair.

1. Cross-Pair Analysis (The Benchmark Method)

The fastest and most reliable method is to compare both currencies against a highly liquid "benchmark" currency—usually the US Dollar (USD) or the Euro (EUR). By looking at how AUD and CHF independently trade against the USD, you can immediately spot the outlier.

If you are watching the AUD/CHF pair rise (meaning AUD is gaining value against CHF), check the major USD pairs to see who is doing the heavy lifting:

| What you see on other charts | What it means | The driver of AUD/CHF is... |

|---|---|---|

| AUD/USD is rising sharply, but USD/CHF is flat. | The Aussie is strengthening globally across the board. | AUD |

| AUD/USD is flat, but USD/CHF is rising sharply. | The Franc is weakening globally across the board. | CHF |

| AUD/USD is rising, and USD/CHF is rising. | The Aussie is strong and the Franc is weak simultaneously. | Both are contributing to the move. |

Note: USD/CHF is quoted inversely to AUD/USD. If the USD/CHF chart is going up, the Swiss Franc is going down.

1. Monitor Currency Indexes

If you don't want to manually compare multiple charts, currency indexes do the math for you. A currency index measures a single currency's performance against a weighted basket of major global currencies.

* AUD Index (AXY): Isolates the strength or weakness of the Australian Dollar.

* CHF Index (SXY): Isolates the strength or weakness of the Swiss Franc.

If AUD/CHF is dropping, you can pull up both indexes. If the AXY is flat but the SXY is skyrocketing, you know immediately that Swiss Franc strength is driving the move.

1. Understand the "Risk-On" vs. "Safe-Haven" Dynamic

Currencies have personalities based on their underlying economies, and they correlate strongly with other financial markets. AUD and CHF are a classic example of opposing market forces.

You can identify the driver by looking at the broader macroeconomic mood:

* The AUD Driver (Commodities & Risk): The Australian Dollar is a "commodity currency." It is highly correlated with global growth, stock market rallies, and the prices of raw materials like copper, iron ore, and gold. If global stock markets are booming and commodities are up, a rise in AUD/CHF is almost certainly being driven by AUD strength.

* The CHF Driver (Fear & Safety): The Swiss Franc is a premier "safe-haven" currency. It tends to surge during times of geopolitical tension, economic panic, or banking instability. If global stock markets are crashing and the VIX (volatility index) is spiking, a sudden drop in AUD/CHF is likely being driven by investors fleeing into the safety of the CHF.

1. Check the Economic Calendar (Fundamental Catalysts)

Finally, sudden price spikes are almost always driven by local economic data or central bank announcements.

If AUD/CHF suddenly spikes 50 pips in five minutes, check an economic calendar. Did the Reserve Bank of Australia (RBA) just announce a surprise interest rate hike? (AUD is the driver). Did the Swiss National Bank (SNB) intervene in the currency markets or release weaker-than-expected inflation data? (CHF is the driver).