What does Forex currency says?

Forex trader base currency

Forex Currency

What does the Forex Currency tells you? Is is quite simple actually than it looks like.In forex the currency are written as XXX/YYY where XXX is a base currency and YYY is a quote currency . EUR/USD , GBP/USD, USD/JPY, AUDUSD, EURNZD are the samples of the format.

Forex Currency Examples

When provided with an exchange rate, each currency pairs indicate how much of the quote currency is needed to buy one unit of the provided base currency (XXX). For example, EUR/USD = 1.05 means that 1euro  is equal to $1.05. This directly says that in order to purchase 1 euro, a buyer must pay $1.05. The currency pair quotation is read in the same manner when selling the base currency. If a seller wants to sell 1 euro, he will get $1.05 for it.

What does this mean?

This means when a buyer buys EUR/USD, he is buying euro and selling U.S. dollars at the same time. Investors buy the pair if they think that the base currency will gain value against the  quote currency. On the other hand, if they sell the pair if they think that the base currency will lose value against the quote currency.

 

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