Example: U.S. dollar (USD) compared to the rupiah currency (IDR). Say for example, 1 USD value (exchange rate), equivalent to 9500 IDR. Because we are comparing USD with IDR, then we’re talking about the currency pair USD to IDR. Writing method is: USD / IDR. This is called as the “currency pair”.
The written first currency (left-side) called the “base currency”, while the second currency (right-side) called the “counter currency”. We’re recently discussing about the USD / IDR, USD’s play the role as base currency, while IDR as the counter currency.
Some currency pairs will we traded are:
- GBP / USD: Great British Pound against the USD
- EUR / USD: Euro against the USD
- AUD / USD: Australian Dollar (Aussie) against the USD
- USD / JPY: USD against Japanese Yen (JPY)
- USD / CHF: USD against Swiss Franc
- USD / CAD: CAD for Canadian Dollar
- NZD / USD: New Zealand Dollar against U.S. Dollar
- EUR / GBP: Euro to Pound Sterling
- EUR / CHF: Euro against the Swiss Franc
- EUR / JPY: Euro to Yen
- AUD / JPY: Aussie against Yen
- GBP / CHF: Sterling to Swiss Franc
- GBP / JPY: Sterling to Yen
GBP / USD, EUR / USD, AUD / USD, USD / JPY, USD / CHF, USD / CAD, and USD / NZD is often called as “major currency pairs” or “Majors”. While the currency pairs that are not traded against the USD is called “cross currency pairs” or “cross rates”.
Later, we will observe the movement of “currency pairs” through the chart. The rising and falling of chart be guided build upon on the base currency. If the graph rises, it means the base currency to strengthened against its currency counters, and vice versa.
Look above there’s an example of the movement of AUD / USD. At the moment the graph rises, it mean the AUD was strengthen against the USD, in other words the USD was weakening against the AUD.