What is a Quote Currency
A quote currency is the second currency quoted in a currency pair in forex. In a direct quote, the quote currency is the foreign currency. In an indirect quote, the quote currency is the domestic currency.
Quote currency is often referred to as the "secondary currency" or "counter currency."
BREAKING DOWN Quote Currency
Understanding the quotation and pricing structure of currencies is essential for anyone wanting to trade currencies in the forex market. Market makers tend to trade specific currency pairs in set ways, either direct or indirect, which means understanding the quote currency is paramount.
For example, the cross rate between the U.S. dollar and the Canadian dollar is quoted USD/CAD is a direct quote, and in this example, the CAD is the quote currency. The represents how many Canadian dollars are worth one single U.S. dollar.
On the other hand, the EUR/USD is an indirect quote, and the USD is the quote currency. This pair represents how many U.S. dollars are required to purchase a single euro.
As the rate in a currency pair increases, the value of the quote currency is falling whether the pair is direct or indirect.