CALVINDOL
VIP Contributor
In the foreign exchange market, a currency pair is a quotation of the relative value of one currency against another. Currency pairs are used to express the exchange rate between two currencies and are the basic instrument in the forex market. For example, the currency pair EUR/USD expresses the value of one Euro (EUR) in terms of U.S. dollars (USD). If the exchange rate is 1.2, it means that one Euro is equivalent to 1.2 U.S. dollars. Currency pairs are typically written as a three-letter code, where the first two letters represent the base currency and the last letter represents the quote currency. In the example above, EUR is the base currency and USD is the quote currency.
The most traded currency pairs in the forex market are known as the "major pairs" and include:
*EUR/USD (Euro/U.S. dollar)
*USD/JPY (U.S. dollar/Japanese yen)
*GBP/USD (British pound/U.S. dollar)
*USD/CHF (U.S. dollar/Swiss franc)
*USD/CAD (U.S. dollar/Canadian dollar)
There are also other currency pairs that include a major currency and a less traded currency, those pairs are known as "minor pairs" or "crosses". Currency pairs are also categorized into two groups: "direct" and "indirect". Direct currency pairs are quoted as the domestic currency (for example USD) against the foreign currency(in this case EUR), while Indirect currency pairs are quoted as the foreign currency (EUR) against the domestic currency (USD). Understanding the currency pairs and their behavior is crucial for forex traders as it helps them to make informed decisions and understand the market.
The most traded currency pairs in the forex market are known as the "major pairs" and include:
*EUR/USD (Euro/U.S. dollar)
*USD/JPY (U.S. dollar/Japanese yen)
*GBP/USD (British pound/U.S. dollar)
*USD/CHF (U.S. dollar/Swiss franc)
*USD/CAD (U.S. dollar/Canadian dollar)
There are also other currency pairs that include a major currency and a less traded currency, those pairs are known as "minor pairs" or "crosses". Currency pairs are also categorized into two groups: "direct" and "indirect". Direct currency pairs are quoted as the domestic currency (for example USD) against the foreign currency(in this case EUR), while Indirect currency pairs are quoted as the foreign currency (EUR) against the domestic currency (USD). Understanding the currency pairs and their behavior is crucial for forex traders as it helps them to make informed decisions and understand the market.
