Reading a pair
In EURUSD, EUR is the base currency and USD is the quote currency. A hypothetical quote of 1.1000 means one euro is valued at 1.10 US dollars, before fees and spread.
Direction and interpretation
Buying a pair expresses a view that the base currency will appreciate relative to the quote currency; selling expresses the opposite view. Both currencies matter.
Pair categories
Major pairs typically include USD and another heavily traded currency. Crosses or minors omit USD; exotic pairs often involve a major currency and a less-traded currency. Labels vary by provider.
What influences FX
Interest-rate expectations, inflation, economic growth, trade flows, political developments and central-bank communication can all affect exchange rates.
Worked example
If USDJPY changes from 150.00 to 151.00, one US dollar buys more yen than before. This is USD appreciation relative to JPY, not necessarily appreciation against all currencies.
Try it yourself
Write the base and quote currency for GBPUSD, USDCHF, USDCAD and EURJPY.
Independent activity
Choose two pairs and summarize one economic driver for each; note why their spreads or volatility may differ.
For your own learning. No upload, submission or approval is required. Use demo or historical practice only.
Download journalKey terms to review
Base currency, Quote currency, Major pair, Cross pair
Check your understanding
Answer all five questions, then check the explanations. Retry as often as you wish.
Choose one answer per question, then check your answers. You can retry; scores are not saved.
Suggested review target: 4 of 5.
Four out of five is a suggested review target. You can open any lesson regardless of your score.