Base and quote currency
In a currency pair, the base currency is the first one listed, the unit being bought or sold, and the quote currency is the second, the currency the price is expressed in.
EUR/USD makes the euro the base and the US dollar the quote: the price is how many dollars one euro buys. The base is the currency a position is long or short; the quote is the currency the profit, loss, and pip value are measured in before any conversion to the account currency.
This page covers the mechanic; it is not trading advice.
Which currency is which, and why it matters
Every Currency pair is written base first, quote second, separated by a slash. In EUR/USD the euro is the base and the US dollar is the quote. The price, 1.0850, is read entirely from that order: one unit of the base, one euro, is worth 1.0850 units of the quote, 1.0850 US dollars. Reverse the order and the number would have to reverse too.
The base is the currency a position takes a view on. Buying EUR/USD buys the base, the euro, and pays for it in the quote, the dollar. The position profits when the base strengthens against the quote and loses when it weakens. The quote currency plays the opposite role: it is what the base is priced in, and it is the currency every result lands in first.
A price move is always the base moving in terms of the quote. EUR/USD rising from 1.0850 to 1.0900 means the euro has gained on the dollar, so each euro now buys more dollars. It does not mean the euro rose in some absolute sense; a currency only ever moves relative to the one it is paired against. The same euro could be falling against the pound at that moment.
What a move does to each side, on EUR/USD
Read a single move through both currencies and the roles become concrete. Take a long 1 standard lot EUR/USD position opened at 1.0850. The base is the euro, so the position is 100,000 euros. The quote is the US dollar, so the price and every result are in dollars, and at entry the position is worth 100,000 × 1.0850 = $108,500.
Move the price to 1.0900, up 50 Pips. The euro has strengthened against the dollar: one euro now buys 1.0900 dollars instead of 1.0850. A 50-pip gain at $10 per pip works out to $500, denominated in the quote currency, the US dollar, because the quote is always what the result is measured in first. On a USD account no conversion is needed; on a EUR or GBP account the dollar result would be converted to the account currency.
- Base currency (EUR)
- the unit traded — 100,000 per standard lot
- Quote currency (USD)
- the pricing currency, where profit and loss land
- Price 1.0850
- one euro buys 1.0850 US dollars
- Rise to 1.0900 (+50 pips)
- euro stronger vs dollar; +$500 per standard lot
When the dollar is the base instead
The roles flip when the dollar leads the pair. On USD/JPY the US dollar is the base and the yen is the quote, so the price, 149.50, is how many yen one dollar buys, and results are measured in yen before conversion. A long USD/JPY position is long the dollar and short the yen, the opposite dollar exposure to a long EUR/USD position, where the dollar is the quote and going long is effectively short the dollar. Reading the pair's order is what tells a trader which way their dollar exposure actually points.
The quote currency also fixes where the pip value is denominated. On EUR/USD the pip value is a clean $10 per standard Lot size because the dollar is the quote and matches a USD account. On USD/JPY the pip value is ¥1,000 per standard lot, which must be converted (¥1,000 ÷ 149.50 = $6.69) precisely because the quote currency is the yen, not the dollar. Which currency sits in the quote position decides the currency of the result before any account conversion.
When neither currency is the US dollar
On a cross pair the same roles apply with one extra conversion at the end. EUR/GBP makes the euro the base and the pound the quote, so one standard lot is 100,000 euros and a one-pip move is worth 10 GBP, the pip value landing in the quote currency, the pound. A trader on a USD account converts that to dollars at the GBP/USD rate: at 1.2400, 10 GBP is $12.40 per pip per standard lot. The base still sets what is traded and the quote still sets what the result is measured in; the account currency adds one conversion step only because neither side of the pair is the US dollar.
The two currencies never trade alone; they form one instrument:
Currency pairHow the two currencies form one tradable instrument, and the major, minor, and exotic tiers.Related terms
Related articles
Common questions
What is the base currency and what is the quote currency?
In a currency pair written base/quote, the base currency is the first one listed and the quote currency is the second. The base is the currency being bought or sold, the unit the price applies to. The quote is the currency the price is expressed in. In EUR/USD the euro is the base and the US dollar is the quote, so the price is the number of US dollars one euro buys.
In EUR/USD, which is the base and which is the quote?
The euro is the base and the US dollar is the quote. EUR/USD at 1.0850 means one euro buys 1.0850 US dollars. A long EUR/USD position is long the euro (the base) and short the US dollar (the quote), so it profits when the euro strengthens against the dollar. One standard lot is 100,000 euros, because the base currency is always the unit the lot size counts.
What does a price rise mean for the base and quote currencies?
A rising price means the base currency is strengthening against the quote currency. EUR/USD moving from 1.0850 to 1.0900 means the euro has gained on the dollar, so each euro buys more dollars than before. A falling price means the opposite: the base is weakening against the quote. A currency never moves on its own in a pair; it moves only relative to the currency it is paired with.
Which currency is my profit or loss measured in?
The quote currency. On EUR/USD results are in US dollars; on USD/JPY results are in yen. Profit or loss equals the pip move times the pip value, expressed in the quote currency, and is then converted to the account currency if the two differ. This is why pip value is a fixed $10 per standard lot on EUR/USD for a US-dollar account: the quote currency and the account currency are the same, so no conversion is needed.