A currency pair is a financial instrument that consists of two currencies and their exchange rate with each other. In forex trading, currency pairs are used to represent the value of one currency relative to another. The first currency in a currency pair is called the base currency, while the second currency is called the quote currency or counter currency. For example, in the currency pair EUR/USD, the euro is the base currency and the U.S. dollar is the quote currency. The exchange rate shows how much of the quote currency is needed to buy one unit of the base currency. Currency pairs are traded on the foreign exchange market and are used by traders to speculate on the movements of exchange rates.