Trading professionals typically seek connections between financial markets in order to forecast future price swings. For several stock market indices and the resulting exchange rates, the forex and stock markets have been observed to correlate. Prior to the 2008 global financial crisis, investors, for example, saw a link between the Nikkei stock index and the USD/JPY currency pair. A decline in the Nikkei would be interpreted by investors as a sign of weakness in the Japanese economy, leading to an increase in the USD's value relative to the JPY. This is referred to as an inverse correlation. When the Nikkei rises, the yen rises in value relative to the US dollar. Many traders use currency correlations to forecast future market movements while opening positions in both markets. Stocks and forex typically work well together when examining technical trading patterns, despite their significant differences. Market predictions are not guaranteed, and because the forex market is so volatile, stock-to-forex correlations can change abruptly with little warning of the markets' direction.

The stock market and foreign exchange (forex) market are interconnected through various economic and financial mechanisms. Changes in currency values can impact multinational companies' earnings, influencing their stock prices. For instance, a stronger domestic currency can reduce the competitiveness of a country's exports, potentially lowering the revenue of export-driven companies. Conversely, a weaker domestic currency can boost these companies' earnings, positively affecting their stock prices.

Additionally, investor sentiment and capital flows between markets create a link. When investors seek higher returns, they might move capital from one market to another, affecting stock prices and currency values. Economic indicators, such as interest rates and inflation, also influence both markets, reflecting broader economic health and investor confidence. This dynamic interplay underscores the global nature of financial markets.