How Exchange Rates Work
An exchange rate is the price of one currency in terms of another. Here is how to read currency pairs, what the quotes mean and how big the world’s currency market really is.
Reading a currency pair
Currencies are quoted in pairs. EUR/USD at 1.15 means one euro costs 1.15 U.S. dollars. The first currency is the base; the second is the quote. If EUR/USD rises, the euro is strengthening against the dollar. USD/JPY at 157 means one dollar buys 157 Japanese yen; if it rises, the dollar is strengthening.
Real moves
| Pair | End of 2024 | End of 2025 | Sept. 17, 2026 |
|---|---|---|---|
| EUR/USD | 1.041 | 1.175 | 1.149 |
| GBP/USD | 1.255 | 1.347 | 1.339 |
| USD/JPY | 157.0 | 156.4 | 156.9 |
In our price data, closes near each date. Past performance does not predict future results.
The biggest market in the world
Currency trading averaged about $9.6 trillion a day in April 2025, according to the Bank for International Settlements’ survey of global dealers, and the U.S. dollar was on one side of 89% of all trades. Most of that is banks, companies and funds, not individual traders. The market runs around the clock from Sunday evening to Friday evening U.S. time.
Floating vs. pegged
Most major currencies float: their prices are set by supply and demand. Some countries peg their currency to another, usually the dollar, and their central bank buys or sells to hold the rate steady. Pegs can hold for years, but they can break suddenly if a country runs short of reserves.
Key takeaways
- An exchange rate is one currency’s price in another.
- In a pair, the first currency is the base.
- Currency trading tops $9 trillion a day, mostly by institutions.
- Most major currencies float; some are pegged.