How to Read a Currency Pair
EUR/USD, USD/JPY… what does each side of the slash mean? And when the number moves, which currency got stronger?
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
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Text version · Forex Basics, lesson 2: “How to Read a Currency Pair”
EUR/USD, USD/JPY… what does each side of the slash mean? And when the number moves, which currency got stronger?
The one before the slash is always "1"
The base currency comes first, the quote currency second: EUR/USD = 1.0850 means 1 euro is worth 1.0850 US dollars.
Bigger number = the first currency strengthens
A rising quote means 1 unit of base currency buys more of the quote currency; a falling quote means the opposite. When USD/JPY, with the dollar first, rises, the dollar is strengthening.
Read it backwards: take the reciprocal
To find how many euros 1 dollar is worth, just divide 1 by the quote. Pairs with the dollar are called a major pair, and their quoting convention is fixed: you won't see USD/EUR.
Key takeaways
- The currency before the slash is the base currency (always "1 unit"); the one after is the quote currency.
- EUR/USD = 1.0850 means 1 euro is worth 1.0850 US dollars.
- Quote rises = base currency strengthens; quote falls = base currency weakens.
- To flip the view, take the reciprocal: at EUR/USD 1.25, 1 dollar = 1 ÷ 1.25 = 0.80 euros.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Pick USD/JPY: what is the "1" on the left pan of the scale? How many yen does the right pan show it buys?
- Pick GBP/USD and drag "Rate change" to +4%: what's the current quote now? Which side of the scale sinks?
- Pick EUR/USD and drag to −3%: does the "1 USD = ? EUR" reading below get bigger or smaller? Which currency strengthened?
- Pick USD/JPY and click "↑ 1%" once: what's the quote now? Did the dollar or the yen strengthen this time?
Quiz and explanations
- 1. What does USD/JPY = 150 mean?
- Answer: 1 dollar = 150 yen.USD comes first, so it's the base currency: 1 dollar is worth 150 yen.
- 2. GBP/USD rises from 1.25 to 1.30. The pound has…
- Answer: Strengthened.1 pound now buys more dollars, so the pound has strengthened.
- 3. EUR/USD = 1.25. How many euros is 1 dollar worth?
- Answer: 0.80 euros.The inverse quote is the reciprocal: 1 ÷ 1.25 = 0.80.
Terms in this lesson
- base currency (Base Currency): The currency before the slash in a pair, such as EUR in EUR/USD; the quote shows what one unit of it is worth.
- major pair (Major Pair): A main currency pair that includes the US dollar, such as EUR/USD or USD/JPY, with the most trading and usually the tightest spreads.
- currency pair (Currency Pair): Such as EUR/USD: how much of the quote currency (USD) one unit of the base currency (EUR) is worth.
- quote currency (Quote Currency): The currency after the slash in a pair, such as USD in EUR/USD, used to price the base currency.