Currency Pairs & the significance of currency pairs?

• A currency pair represents the exchange rate between the two
currencies. For example, the rate at which the EUR/USD is
trading that represents the number of US Dollars one Euro can
purchase. The first currency is called the base currency and the
second currency is called the counter currency.
• An example of how currency pairs trade is if a trader believes t the he
Bank of Japan will intervene to cause a decrease in the Yen
against the US Dollar, then the trader would Ask USD/JPY (Ask
the US Dollar/Bid the Yen). However, if the trader believes that
Japanese investors are losing faith in the United States' econom economy y
and are pulling money out of the US into Japan, then the trader
would Bid USD/JPY (Bid the US Dollar/Ask the Yen).
••Below is an example of how currency pairs are listed on trading stations. The currency pairs are listed on the left side of the column. The Bid price is the level at which a trader can SellSellthe the currency pair and the Ask price is the level at which a trader ccurrency can an BuyBuythe currency pair.