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💱Forex

Currency Pair

The quotation of one currency's value against another — the fundamental unit of trading in the foreign exchange market.

Currency pairs express how much of one currency (the "quote" currency) you need to buy one unit of another (the "base" currency). For example, EUR/USD at 1.10 means one euro costs $1.10 US dollars. Every forex trade involves simultaneously buying one currency and selling another, which is why pairs are always quoted together.

The first currency in the pair is called the base currency; the second is the quote currency. When you buy EUR/USD, you're buying euros and selling dollars. The pair's price rises when the base currency strengthens relative to the quote currency and falls when it weakens.

Currency pairs are grouped into three tiers: majors (the most liquid pairs, all involving USD), crosses or minors (pairs between major currencies that exclude USD), and exotics (pairs involving one major currency and one from an emerging or smaller economy). Majors like EUR/USD, GBP/USD, and USD/JPY account for the vast majority of global forex volume.

Related terms
Major PairsBase CurrencyQuote CurrencyPipSpread (Forex)
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This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.