Exchange Rate
The price of one currency expressed in terms of another.
The exchange rate is the price of one currency expressed in another.
The exchange rate is how much of one currency you get for another, such as how many dollars one euro costs. It is the price that every forex trade is built on. Rates move with interest rate expectations, trade flows and economic data.
How It Works
- It is the price at the centre of every pair
- Rates move on rates, flows and data
- Every currency has a rate against every other
Trading Tips
Read the rate as a price, not a constant
Know which currency drives the pair you trade
Expect the biggest moves around rate decisions
Exchange Rate Example
Say EUR/USD moves from 1.0800 to 1.1000 over a quarter. A European exporter earning dollars loses nearly 2% of revenue in translation. An American importer gains the same. One rate reshuffles millions of real invoices.
How Traders Use Exchange Rate
Watch exchange rates as business costs, not just trade setups. Exporters hedge strength. Importers pray for it. Position with the flow of who must transact, not who wants to speculate.
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