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 the 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’ economy and are pulling money out of the US into Japan, then the trader would Bid USD/JPY (Bid the US Dollar/Ask the Yen).
This 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 Bid the currency pair and the Ask price is the level at which a trader can Ask the currency pair.