what is a currency pair in forex?

Understanding Currency Exchange in Forex Trading

Exchange transactions occur in any market, whether financial or non-financial, and involve swapping a commodity or service for a specified amount of money. For example, in the stock market, if you buy 1,000 shares of Ford Motor Company at $1 per share, you will pay $1,000 to acquire those shares. In the Forex market, however, you buy one currency and pay for it with another currency, meaning you exchange one currency for another.

In Forex trading, transactions are conducted in currency pairs. For instance, if you decide to buy 1,000 euros, you will pay in another currency, such as the US dollar. In this case, you would be making a purchase of the Euro/US Dollar (EUR/USD) pair.

This video explains the concept of currency pairs and how trading works in Forex.