Forex glossary
Currency Strength Meter
A currency strength meter combines selected pairs to describe each currency's relative performance over a chosen window. It may use percentage changes, momentum or other rules. There is no single standard formula: basket composition, weights, timeframe and quote direction affect its readings.
Illustrative example
How does it work in practice?
Assume a simple meter uses daily changes: EUR/USD rises 1% and EUR/GBP rises 0.5%. Their average is 0.75%; this hypothetical reading describes that basket rather than a universal measure of euro strength.
A case to work through
Two sides of one pair
Hypothetically, EUR/USD rises 1% over the selected window and the meter uses only this pair.
- The move means EUR strengthens relative to USD, not a positive score for both currencies.
- A broader basket and different weights can alter the ranking against other currencies.
What follows? Check the meter's composition before interpreting its rank.
Example boundary: One pair does not measure universal economic strength or the whole market.
Checking a ranking
Text description of the diagram
- Quote direction: Base and quote currencies have opposite perspectives.
- Basket and weights: Check pairs, lookback and change aggregation.
- Relative ranking: Interpret the result within that method.
A useful distinction
Currency Strength Meter / Momentum Oscillator
A strength meter compares currencies through a basket of pairs; a momentum oscillator measures one instrument's price-series change.
Check your understanding
Interpret a pair's change from base and quote currency perspectives.
Show the answer and explanation
EUR strengthening relative to USD
The rate expresses a relative relationship between two currencies.
Volatility and transformed data
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Sources and documentation
- MQL5 – Currency Strength Index
An original strength-index implementation illustrating basket composition and aggregation.
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The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.