Base Currency
The first currency listed in a forex pair, representing the unit being bought or sold against the quote currency.
What is Base Currency?
The base currency is the first currency listed in a foreign exchange (forex) pair. When a currency pair is quoted, the price expresses how much of the second currency (the quote currency) is needed to buy one unit of the base currency. For example, in EUR/USD = 1.08, the euro is the base currency and the quote states that 1 euro costs 1.08 US dollars. The US dollar serves as the base currency in USD/JPY and USD/CHF pairs, while other major currencies serve as the base in EUR/USD, GBP/USD, and AUD/USD. Understanding base and quote currency conventions is fundamental to reading forex prices and calculating trade profits and losses.
Example
In the EUR/USD pair, the euro is the base currency. If EUR/USD moves from 1.0800 to 1.0850, the euro has strengthened against the dollar by 50 pips. A trader who bought €100,000 (one standard lot) at 1.0800 and sold at 1.0850 would earn $500 — the pip move multiplied by the lot size.
Source: Bank for International Settlements — Triennial Central Bank Survey