In the foreign exchange (forex) market, currencies are traded in pairs. The value of one currency is determined by its comparison to another currency. Some examples of currency pairs include:
- EUR/USD (Euro/US Dollar)
- GBP/USD (British Pound/US Dollar)
- USD/JPY (US Dollar/Japanese Yen)
- USD/CHF (US Dollar/Swiss Franc)
- AUD/USD (Australian Dollar/US Dollar)
- USD/CAD (US Dollar/Canadian Dollar)
These are some of the most commonly traded currency pairs in the forex market, but there are many other currencies that are traded as well.
In a currency pair, the first currency is known as the "base currency" and the second currency is known as the "quote currency" or "counter currency." The base currency is the currency that is being used as the reference for the exchange rate.
For example, in the currency pair EUR/USD, the Euro is the base currency and the US dollar is the quote currency. This means that the exchange rate represents how many US dollars can be bought for one Euro.
The quote currency, also known as counter currency, is the second currency in a currency pair, and its value is expressed in terms of the base currency.
For example in the currency pair EUR/USD, the value of 1 Euro (base currency) is quoted in terms of US dollars (quote currency).
It's important to note that in a currency pair, the base currency is the one you are buying or selling, and the quote currency is the one you are using to buy or sell the base currency.
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