This also works inversely if the currency is considered ‘expensive’. Currencies are traded in pairs. The first currency in the pair is called the Base currency and is the currency you are either buying or selling. The second currency of the pair is the counter currency that you are trading against. For example, buying the EURUSD means you are buying the EUR and selling the USD.
For example, if the EURUSD is currently trading at 1.3200, this means each Euro is equal to USD 1.32. If you anticipate the value of the EUR in relation to the USD to increase, you can execute a Buy order at this price, meaning you are buying EUR and selling USD.
Let’s assume the price of the EURUSD increases to 1.3300; this means that now each Euro is equal to USD 1.33 and you have made a profit. The most traded currency pairs are USD, EUR, GBP, CAD, CHF, JPY, AUD and NZD.