What is Currency Pair?
A currency pair is the quotation of the relative value of one currency unit against another, forming the basis of forex trading.
In the foreign exchange market, currencies are always traded in pairs, such as EUR/USD or USD/JPY. The first currency listed is the 'base' currency, and the second is the 'quote' or 'counter' currency. The exchange rate tells you how much of the quote currency is needed to purchase one unit of the base currency.
Currency pairs reflect the economic and interest rate dynamics between two countries. For instance, if the European Central Bank raises interest rates while the Fed holds steady, the EUR/USD pair might rise as the Euro becomes more attractive to yield-seeking investors.
ExampleIf the EUR/USD currency pair is quoted at 1.08, it means 1 Euro can be exchanged for 1.08 US Dollars.