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Currency pair: meaning in forex and gold trading

A currency pair quotes the price of one currency in terms of another, such as EUR/USD, the number of dollars per euro.

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Definition

Currency pair: A currency pair quotes the price of one currency in terms of another, such as EUR/USD, the number of dollars per euro.

How pairs are written

Every forex trade buys one currency and sells another, so prices are quoted in pairs. In EUR/USD the euro is the base currency and the dollar is the quote currency. A price of 1.1220 means one euro costs 1.1220 dollars. Buying the pair means buying euros and selling dollars.

Types of pairs

Pairs that include the US dollar and another major currency are the majors. Pairs of two non-dollar majors, such as EUR/GBP, are crosses. Pairs with an emerging market currency are exotics and usually have wider spreads. Gold is often quoted like a pair, XAU/USD, meaning dollars per troy ounce.

Worked example

GBP/USD at 1.3400: one pound buys 1.34 dollars. If you think the pound will strengthen you buy the pair; if you think it will weaken you sell it.

Common mistakes

  • Reading the pair backwards and trading the wrong direction.
  • Forgetting that a dollar move affects every USD pair at once.

If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.

Base currency

The base currency is the first currency in a pair; the price shows how much of the quote currency one unit of ...

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Quote currency

The quote currency is the second currency in a pair; profit, loss and pip value are first calculated in it.

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Major pairs

The major pairs are the most traded currency pairs, each combining the US dollar with another major currency.

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Cross pairs

Cross pairs are currency pairs that do not include the US dollar, such as EUR/GBP or EUR/JPY.

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Long and short

Going long means buying to profit from a rise; going short means selling to profit from a fall.

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Tools and guides

Frequently asked questions

What is the most traded pair?

EUR/USD.

Is gold a currency pair?

Not strictly, but XAU/USD is quoted the same way, in dollars per ounce.

Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.