In Forex, currencies are quoted in pairs. The first currency in the pair is the base currency, while the second currency in the pair is the counter currency.
For example, in the currency pair EURUSD, Euro is the base currency and USD is the counter currency. The base currency represents how much of a counter currency is needed to have one unit of the base currency.
- 1 EUR = 1.1233 USD
It means, for every 1 EUR you need 1.1233 USD.
How currency pairs are presented
Each currency are presented in an abbreviated manner. In the above example, Europe’s currency, Euro, is presented as Eur. Currency abbreviations are determined by the International Standardization Office (ISO), ISO 4217.
Examples of other currency abbreviations are as follow:
US Dollar = USD
Japanese Yen = JPY
British Pound = GBP
Currency pairs are written in either XXXYYY or XXX / YYY format. For examples, GBPUSD (GBP/USD), USDJPY (USD/JPY), USDCHF (USDCHF), EURUSD (EUR/USD), and AUDUSD (AUD/USD).