SkyTrade
Sign up
FeaturesPlatformSecuritySign in
Glossary · Forex

Base currency

The first currency in a pair; the quoted price tells you how much of the second currency one unit of it costs.

By Sky Trade editorial teamUpdated

In a currency pair written as XXX/YYY, the base currency is XXX. The price always reads “one unit of the base equals this many units of the quote”. In GBP/USD 1.2700 the base is the pound: £1 costs $1.27.

The base matters for reading direction. When the pair rises, the base is getting stronger against the quote; when it falls, the base is getting weaker. A Higher trade on USD/JPY is therefore a view that the dollar will gain against the yen — or, equivalently, that the yen will lose against the dollar.

Which currency comes first is a matter of market convention, and the conventions are historical rather than logical. The euro is the base in every pair it appears in; the pound comes before the dollar; the dollar comes before the yen, the Swiss franc and the Canadian dollar. That is why you see USD/JPY but EUR/USD.

A frequent slip is reading a rising USD/CHF chart as the franc getting stronger. It is the opposite: the franc is weakening. Read this entry together with quote currency and currency pair.

Example

USD/CAD moves from 1.3600 to 1.3650: the base currency, the US dollar, has strengthened — one dollar now buys 1.3650 Canadian dollars instead of 1.3600.

Related terms

Practise first, then decide

Every Sky Trade account comes with a $10,000 demo balance on the same prices and payouts as the real account. Create an account or read how the demo works.

Create an accountAbout the demo account