Quote

In the foreign exchange market, currencies are always quoted in pairs, meaning one currency is quoted in terms of another. This is because traders are always buying one currency against another when trading in market.

This quotation system helps traders understand the value of one currency relative to another, and it reflects how much of the quote currency is required to purchase one unit of the base currency.

Here is an example. Let’s assume the EUR/USD exchange rate is 1.15:

• EUR/USD = 1.15 means that 1 Euro (EUR) is worth 1.15 U.S. Dollars (USD).
• This means if traders want to buy 1 Euro, they need to spend 1.15 U.S. Dollars.

Now, to find out how many Euros would be needed to buy 1 U.S. Dollar, take the inverse of the exchange rate:

1 / 1.15 = 0.8696

So, 0.8696 Euros would buy the trader1 U.S. Dollar.