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Currency pairs in the foreign exchange market are the quotes for two different currencies, and it shows the relative value of one currency against another. The first listed currency in any currency pairs is called the base currency or trading currency and the second currency is called the quote currency. It indicates how much quote currency is required to purchase a unit of base currency. The currency is identified by the ISO currency code or the three-letter alphabetic code associated with it in the international market. Therefore, for US dollars, the ISO code is US dollars.
Identifying Currency Pairs
Currency pairs are written and identified by concatenating the ISO currency codes of the base currency and the quote currency, and then separating the two codes with a slash. The most traded currency pair is the relation between the euro and the US dollar, designated as EUR/USD. EUR/USD is a typical foreign exchange market notation and the EUR/USD quote of 1.1200 means that one euro can be exchanged for 1.1200 USD. Here, EUR is the base currency and USD is the quote currency or the counter currency. This means that 1 euro can be exchanged for 1.1200 US dollars.
The EUR/USD is a typical symbol of the foreign exchange market. The quoted price of euro/dollar is 1.1200 which means that one euro can be exchanged for 1.1200 USD dollars. Here, EUR is the base currency and USD is the quote currency or the relative currency. This means that 1 euro can be exchanged for 1.1200 US dollars.
The most traded currency pairs in the world are called the Major currency pairs, trading 24 hours a day and five days a week. The currencies involved are Euro, US Dollar, British Pound, Japanese Yen, Swiss Franc, Canadian and Australian Dollar. All foreign exchange transactions involve the purchase of one currency and the sale of another currency.
Most traded currency pairs
EUR/USD. This currency pair tells us how many U.S. dollars are needed to purchase one Euro.
GBP/USD. This currency pair tells us how many U.S. dollars are needed to purchase one British pound.
USD/JPY. This currency pair tells us how many Japanese yen are needed to purchase one U.S. dollar.
USD/CHF. This currency pair tells us how many Swiss franc are needed to purchase one U.S. dollar.
USD/CAD. This currency pair tells us how many Canadian dollars are needed to purchase one U.S. dollar.
AUD/USD. This currency pair tells us how many U.S. dollars are needed to purchase one Australian dollar
NZD/USD. This currency pair tells us how many U.S. dollar are needed to purchase one New Zealand dollar.
EUR/JPY. This currency pair tells us how many Japanese yen are needed to purchase one Euro.
GBP/JPY. This currency pair tells us how many Japanese yen are needed to purchase one British pound.
EUR/GBP. This currency pair tells us how many British pound are needed to purchase one Euro.
Most traded currency in the world by value
Top ten most traded currency pairs by volume 2020 is given below
