Post No. 22

• A currency pair represents the exchange rate between the twocurrencies. For example, the rate at which the EUR/USD istrading that represents the number of US Dollars one Euro canpurchase. The first currency is called the base currency and thesecond currency is called the counter currency.• An example of how currency pairs trade is if a trader believes t the heBank of Japan will intervene to cause a decrease in the Yenagainst the US Dollar, then the trader would Ask USD/JPY (Askthe US Dollar/Bid the Yen). However, if the trader believes thatJapanese investors are losing faith in the United States' econom economy yand are pulling money out of the US into Japan, then the traderwould Bid USD/JPY (Bid the US Dollar/Ask the Yen).