Understanding FX Quote Conventions

Ever wonder what it means when you see currency quotations like these? EUR/USD Currencies are quoted in relation to another currency. For example, when we refer to the exchange rate of the euro (the currency of the European Union) to the U.S. dollar we quote the relationship, or exchange rate, as EUR/USD. The first currency in the quotation – in this case the euro – is represented by its three-letter symbol, EUR. This is known as the named or base currency. The second currency – in this case the U.S. dollar, shown by its three-letter symbol, USD – is known as the terms or quote currency.