Currency pairs explained
4 min read · Educational content, not financial advice
Every Forex quote involves two currencies written as a pair, like EUR/USD. The first currency listed (EUR) is the base currency; the second (USD) is the quote currency. The price tells you how much of the quote currency it takes to buy one unit of the base currency.
If EUR/USD is trading at 1.0850, it means 1 euro buys 1.0850 US dollars. If you believe the euro will strengthen against the dollar, you buy the pair; if you believe it will weaken, you sell it.
Pairs are grouped into majors (pairs involving USD and another large economy's currency, like EUR/USD or USD/JPY), minors (major currencies without USD, like EUR/GBP) and exotics (a major currency paired with a smaller or emerging-market currency). Majors typically have the tightest spreads and highest liquidity.