Currency pair

The unit of quotation in foreign exchange. The base currency is written first and is always one single unit; the counter currency is written second and is what the rate counts. A position in a pair is a position in both currencies at once, long one and short the other, which is why a foreign exchange price is always a relative statement and never a valuation of a currency on its own.

Which currency is written first is a market convention with a settled order of precedence rather than a choice made per quote, and the convention is followed almost universally so that two desks quoting the same pair are quoting the same direction. Pairs are grouped loosely into majors, which carry the dollar against a small set of heavily traded currencies, crosses, which carry no dollar, and exotics, which pair a major currency with one from a smaller or more restricted market.

The reading error is treating a rising rate as the pair going up in some absolute sense. A rising rate means the base has strengthened against the counter, and nothing more: it can happen because the base rose, because the counter fell, or because both moved and one moved further. It is entirely ordinary for a currency to strengthen against one counterpart and weaken against another on the same day, which is what an index of a currency against a basket is built to summarise.