USD Strength from Four Currency Pairs Relative to an EMA
Summary
This indicator estimates short-term US dollar strength by combining the distances of four currency pairs from an exponential moving average. It measures each closed candle’s distance from its EMA in pips, then averages the values for EUR/USD, GBP/USD, AUD/USD, and USD/JPY. The three pairs quoted with USD as the quote currency are sign-reversed, while USD/JPY contributes with its direct sign, so the combined measure is intended to represent dollar strength.
The EMA period is configurable, and the indicator can be loaded on any chart or timeframe. On a USD/JPY chart, the histogram direction is opposite to the convention used by the other pairs. The description gives the formula and usage notes but no calibration advice, historical evidence, or trading rules. The measure is a relative price-distance signal; it does not establish that currency strength predicts future returns.
Key ideas
- The indicator combines EMA-relative pip distances from EUR/USD, GBP/USD, AUD/USD, and USD/JPY.
- It reverses the signs for EUR/USD, GBP/USD, and AUD/USD before averaging the four values.
- The EMA period controls the reference used to measure relative price distance.
- On a USD/JPY chart, the displayed histogram runs in the opposite direction.
- No predictive evidence or strategy rules are provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.