Currencies Pairs
Forex trading is all about buying and selling currency pairs. But how do these pairs move, and what affects their prices? In this guide, we’ll break down the basics so you can understand what makes currency values change.
What is a Currency Pair?
A currency pair consists of two currencies being traded. The first currency is the base currency, and the second is the quote currency. For example:
- EUR/USD – Euro vs. US Dollar
- GBP/JPY – British Pound vs. Japanese Yen
When you trade forex, you are betting on whether the base currency will rise or fall against the quote currency.
What Makes Currency Pairs Move?
- Supply and Demand – If more people want to buy a currency, its price goes up.
- Interest Rates – Higher interest rates attract investors, increasing currency value.
- Economic News – Reports on GDP, employment, and inflation affect currency prices.
- Market Sentiment – Traders’ emotions can influence price movements.
Conclusion
Understanding currency pairs is key to forex trading. Now, let’s dive deeper into Forex Trading vs. Stock Trading: What’s the Difference?
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