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Some algorithmic traders argue that cross pairs (EUR/GBP, EUR/JPY, GBP/JPY) offer cleaner technical patterns because they remove the US dollar's dominant noise. Without the Fed's policy shadow, these pairs may reflect pure relative-value dynamics between two non-USD economies. However, crosses have wider spreads and lower liquidity, increasing execution risk. The trade-off between pattern purity and transaction cost defines a frontier that systematic strategies must navigate carefully.
controversy
Supporting arguments
- Cross pairs isolate bilateral economic relationships
- Wider spreads demand higher edge to overcome costs
- Lower liquidity increases slippage during volatile events
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