Currency Pair Terms

The Australian Dollar is a commodity-linked currency driven by exports, Chinese demand, and Reserve Bank of Australia policy.

The base currency is the first currency in a currency pair (e.g., EUR in EUR/USD). It represents what you are buying or selling, and is always valued at 1.0.

The Canadian Dollar is a commodity-linked currency moved by oil prices, Bank of Canada policy, and global risk appetite.

The Swiss Franc is a safe-haven currency backed by Switzerland's stability and often influenced by Swiss National Bank policy.

Commodity currencies are currencies from countries whose economies heavily depend on exporting raw materials. The major commodity currencies are AUD (Australian Dollar tied to iron ore/gold), CAD (Canadian Dollar tied to oil), and NZD (New Zealand Dollar tied to dairy products).

A cross rate is an exchange rate between two currencies where neither is the US Dollar. Examples include EUR/GBP, AUD/JPY, and EUR/CHF. Cross rates are calculated from the respective USD exchange rates of both currencies.

A currency pair represents the exchange rate between two currencies (e.g., EUR/USD). The first currency is the base, the second is the quote. You buy one and sell the other simultaneously, speculating on their relative value change.

The euro is the shared currency of the Eurozone and a major global reserve currency, influenced by ECB policy and regional data.

GBP is the United Kingdom's official currency and one of the oldest and most traded currencies, known for high volatility and sensitivity to Bank of England policy and UK economic data.

JPY is Japan's official currency and a primary safe-haven asset that strengthens during market stress, heavily influenced by Bank of Japan policy and carry trade dynamics.

NZD is a commodity-linked currency driven by Reserve Bank of New Zealand policy, dairy export demand, and Asia-Pacific risk appetite, making NZD pairs favorites for carry traders seeking yield differentials.

The quote currency is the second currency in a pair (e.g., USD in EUR/USD). It shows the price of one unit of the base currency.

Exotic pairs combine a major currency with an emerging market currency (e.g., USD/TRY). They have wider spreads, lower liquidity, and higher volatility.

Major pairs are the most traded currency pairs that always include USD (e.g., EUR/USD, GBP/USD). They have the tightest spreads and highest liquidity.

USD is the world's foremost reserve currency involved in 88% of forex transactions, with Federal Reserve policy influencing global markets and capital flows.