How to Read Currency Pairs: A Quick Forex Guide

Learn how to read currency pairs in Forex trading. Understand base and quote currencies with examples like EUR/USD for better trading decisions.

What Are Currency Pairs?

Forex trading revolves around currency pairs—the backbone of every transaction. These pairs represent the simultaneous buying and selling of two currencies, quoted together like EUR/USD or GBP/JPY. The first currency is the base currency, and the second is the quote currency (also called the variable currency). Essentially, you sell the base to buy the quote.

For instance, if EUR/USD is 1.20, it means 1 Euro equals 1.20 US dollars. Simple, right?

Base Currency

The base currency is the first in the pair and the one being priced. It’s the reference point for the exchange rate. In EUR/USD, the Euro (EUR) is the base currency—you’re measuring its value against the quote currency.

Quote/Variable Currency

The quote currency, or variable currency, comes second and shows how much of it you need to buy one unit of the base currency. In EUR/USD, the US dollar (USD) is the quote currency. If the rate is 1.20, you’d spend 1.20 USD to get 1 EUR.

Why It Matters

Grasping currency pairs is your first step in Forex trading. It helps you decode exchange rates and make smarter trades—whether you’re buying low or selling high.