Currency pair

What is a currency pair

A currency pair is a quotation of two different currencies that shows how many units of one currency are needed to buy one unit of the other. It is used primarily in forex trading. The first currency in the pair is called the base currency, and the second is the quote currency.

How a currency pair works

The value of a currency pair changes based on market supply and demand, economic indicators, geopolitical events, and the monetary policy of central banks.
For example, in the EUR/USD pair a value of 1.10 means that one euro can be bought for 1.10 U.S. dollars.

Main types of currency pairs

• Majors – include the U.S. dollar and currencies of the largest world economies (e.g., EUR/USD, GBP/USD).
• Minors – do not include the U.S. dollar but include other major world currencies (e.g., EUR/GBP).
• Exotic pairs – combine a currency of a developed country with one from an emerging market (e.g., USD/TRY).

Why currency pairs matter

• They allow speculation on changes in exchange rates.
• They are essential for international trade and investment.
• They provide opportunities for short-term trading as well as long-term investing.

Currency pairs on Stonkee

On Stonkee you can track the performance of both major and exotic currency pairs, view real-time charts, and analyze them using indicators such as MACD or a trend line. The AI alerts you to sharp exchange-rate movements or when preset price levels are reached.

Summary

A currency pair is the fundamental building block of the forex market. Understanding it is essential for trading currencies, managing risk, and taking advantage of opportunities that arise from exchange-rate movements.