Understanding Currency Pairs

[Sbrown]

Hi all,

I've been trying to wrap my head around currency pairs in forex trading. Why are currencies always quoted in pairs, and how do I read them correctly? For example, what does it mean when the EUR/USD pair is rising?

Thanks in advance for your help!

 

[Fin_Trader]

The growth of the EUR/USD currency pair means that the euro is strengthening against the US dollar. At the same time, this pair is the most common for trading, is the most liquid; with minimal spreads, which minimizes your costs when trading (for example, my broker has a spread of only 0.1-0.2 for this pair); there is not much volatility and it is one of the most predictable in terms of technical analysis.

 

[Jonathan Lee]

Currencies are quoted in pairs because Forex trading involves exchanging one currency for another. The first currency is the base currency, and the second is the quote currency. When the EUR/USD pair is rising, it means the Euro is strengthening against the U.S. Dollar, as more USD is required to buy 1 EUR.

 

[Jason Libson]

Currencies are quoted in pairs because you're always buying one currency and selling another simultaneously. The first currency in the pair is the "base" currency, and the second one is the "quote" currency.

When the EUR/USD pair is rising, it means the Euro (EUR) is strengthening against the US Dollar (USD). In other words, you need more USD to buy 1 EUR.