Currencies are forms of money which are issued by governments and which are commonly traded in binary options and Forex.
With the exception of the European Union which uses a common currency (the euro), countries have their own currencies.
When trading binary options, a currency will never be traded on its own – but will rather be paired with another currency or commodity.
All currency pairs are comprised of a Base and Quote currency. Let’s take the EUR/USD pair as an example. If the current market rate of the EUR/USD is 1.3946, this means that 1 euro is being exchanged for 1.3946 dollars – in this example, the euro is the currency that is being quoted, using the US dollar as a reference.
Some currencies are stronger than others because of the fact that they are traded more. These are called Majors, and include the euro, US dollar, Japanese yen, UK sterling pound, Canadian dollar, Australian dollar, and Swiss franc.
If the EUR/USD market rate rises in value, this means that the US dollar has weakened, or that the euro has strengthened. If the rate drops in value, then this can only mean that the Euro is weaker than the dollar.