Introduction
In forex, you don’t buy or sell a single currency—you trade one currency against another. These are called currency pairs, and they are the foundation of every forex transaction.
Whether you’re buying EUR/USD or selling GBP/JPY, understanding how currency pairs work is essential to your success in 2025.
1. What is a Currency Pair?
A currency pair represents the exchange rate between two currencies.
Example:
EUR/USD = 1.1000 → means 1 Euro = 1.10 US Dollars
- The first currency is the base currency
- The second currency is the quote currency
You are:
- Buying the base and selling the quote when you go long
- Selling the base and buying the quote when you go short
2. Types of Currency Pairs
There are 3 main categories:
🔹 Major Pairs
The most traded pairs with USD.
Examples:
- EUR/USD
- GBP/USD
- USD/JPY
- USD/CHF
✅ High liquidity
✅ Tight spreads
✅ Great for beginners
🔸 Minor Pairs (Crosses)
Pairs that don’t include USD.
Examples:
- EUR/GBP
- GBP/JPY
- AUD/NZD
✅ Decent liquidity
❌ Spreads can be higher
🔺 Exotic Pairs
Pairs involving emerging market currencies.
Examples:
- USD/TRY (Turkish Lira)
- USD/ZAR (South African Rand)
- EUR/THB (Thai Baht)
❌ Low liquidity
❌ High spreads
✅ Can be volatile and profitable for experts
3. How Currency Pairs are Quoted
Quotes have bid and ask prices:
- Bid: What the broker will pay you if you sell
- Ask: What you’ll pay if you buy
- The difference is called the spread
Example:
EUR/USD → Bid: 1.0998 | Ask: 1.1000 | Spread: 2 pips
4. Factors That Affect Currency Pairs
Currency prices are affected by:
- Interest rate decisions (Fed, ECB, BoE, BoJ)
- Economic data (GDP, CPI, NFP)
- Political news
- Market sentiment
Different pairs react differently:
- USD/JPY sensitive to bond yields
- GBP/USD moves on Brexit-related news
- AUD/USD moves with commodity prices
5. How to Choose Which Currency Pairs to Trade
✅ As a Beginner:
- Stick to majors (EUR/USD, GBP/USD)
- Lower risk, stable movements
✅ As You Gain Experience:
- Try minor pairs with good volatility
- Look for pairs that align with your strategy
❌ Avoid:
- Exotic pairs unless you’re experienced
- High spread = higher cost = harder to profit
6. Best Times to Trade Currency Pairs
- London session (14:00 – 22:00 WIB): EUR, GBP pairs
- New York session (19:00 – 03:00 WIB): USD pairs
- Asian session (06:00 – 12:00 WIB): JPY, AUD pairs
👉 Overlap between London & NY = highest volume
