What is currency pair
A currency pair in Forex represents the value of one currency relative to another, showing how much of the second currency (called the quote currency) is needed to buy one unit of the first currency (called the base currency). For example, in the pair EUR/USD = 1.10, the Euro is the base currency and the US Dollar is the quote currency, meaning 1 Euro equals 1.10 Dollars. Currency pairs are broadly classified into three types: major pairs, which always include the US Dollar and have high liquidity and low spreads (like EUR/USD or USD/JPY); minor pairs, which do not include the US Dollar but involve major currencies (like EUR/GBP or GBP/JPY); and exotic pairs, which include one major currency and one emerging market currency (like USD/INR), usually having higher volatility and spreads. When the price of a currency pair rises, the base currency is strengthening against the quote currency, and when it falls, the base currency is weakening. Traders analyze these movements to make profits by buying (going long) or selling (going short) a currency pair, making understanding their structure and behavior essential for successful Forex trading.