In Forex trading, correlation is a statistical measure of how two currencies move in relation to each other. Positive Correlation: If two currency pairs have a positive correlation, it means they typically move in the same direction. For example, if the EUR/USD and GBP/USD pairs have a positive correlation, when the value of EUR/USD rises, the value of GBP/USD also tends to rise. Negative Correlation: If two currency pairs have a negative correlation, it means they typically move in opposite directions. So, if the EUR/USD and USD/CHF pairs have a negative correlation, when the value of EUR/USD rises, the value of USD/CHF tends to fall, and vice versa. Understanding these correlations can help Forex traders manage their portfolios more effectively. For instance, if you know two pairs are positively correlated, you might not want to risk doubling your exposure by placing the same trade on both. Similarly, knowing that pairs are negatively correlated can help with hedging strategies.