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Base currency

By Jarosław Wasiński • Published: • Updated:
The base currency is the first currency listed in a pair notation and the unit being bought or sold. In EUR/USD, the euro is the base; a quote of 1.0850 means one euro costs 1.0850 U.S. dollars. Profits and losses are calculated relative to movements in the base currency's value. Understanding which currency is the base is essential before sizing any trade. See What is a currency pair.
Example.

In EUR/JPY 160.00, EUR is the base and JPY the quote currency: JPY 160 per EUR. EUR 10,000 of exposure corresponds to JPY 1,600,000 at that rate. A 0.01 JPY/EUR change corresponds to JPY 100 before costs.

Read the first symbol

The base is the first currency in the written pair, not necessarily the account currency or the currency of the reader’s country. Buying EUR/JPY creates positive exposure to EUR relative to JPY. Whether currency is actually delivered depends on the contract.

Units and contract size

For a linear FX contract, lot size multiplied by contract size gives base-currency units. Multiplying units by the quote gives quote-currency notional; multiplying by the price difference gives quote-currency price P&L. Other products require their own multipliers and settlement rules.

Inverting changes the roles

JPY/EUR makes JPY the base and EUR the quote. Its positive midpoint is the reciprocal of EUR/JPY; executable inverse Bid uses the reciprocal of the original Ask. Do not compare the directions of two charts without identifying which currency appears first. Account-currency conversion remains a separate step.

FAQ

Is base currency another name for my account currency?

No. The pair’s base is fixed by the notation, while the account currency is the reporting denomination.

Does buying the base always mean physical ownership?

No. A cash-settled CFD provides economic price exposure; deliverable exchange has different cash flows.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
  • Advocate for market transparency, promoting education grounded in hard data and institutional reports (BIS, ESMA, CFTC).

All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.