How Currency Pairs Work

Currencies are always quoted in pairs, such as EUR/USD. The first currency is the base; the second is the quote.

Reading the price

If EUR/USD = 1.10, then 1 euro buys 1.10 US dollars. If you think the euro will strengthen against the dollar, you buy the pair; if you think it'll weaken, you sell it.

Pair categories

• Majors — pairs with the USD (EUR/USD, USD/JPY).
• Crosses — major currencies without the USD (EUR/GBP).
• Exotics — a major paired with a smaller economy's currency.