Understanding Forex prices

Price quotes

Understanding the forex quote could be difficult if you are beginning with the concept due to some terms and figures. However, it gets simple when you can recall two things

 

  • In a currency pair, the first currency listed is the base currency. For example, In EUR/USD. EUR is the base currency.
  • A base currency value is always equal to one

 

A quote of EUR at 1.34678 is to say that 1 EURO = 1.34678 US Dollar (US). If price of the currency pair rises, it means that the EURO has appreciated, and the other currency in the pair known as the quote currency (USD) has weakened.

Continuing with our example of EUR/USD currency pair, if value of the pair rises from 1.34678 to 1.35678 (100 pips), EURO is now stronger, which can buy more USD than before.

Similarly, if the value of currency pair decreases, say by 100 pips in our example (EUR/USD = 1.33678), It would mean that base currency (EURO) has weakened against the quote currency (USD).

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