The basic idea
Currencies are quoted in pairs because the value of one currency is always expressed relative to another. An exchange rate is simply the price of one currency in terms of a second currency.
Unlike a single stock exchange, the foreign-exchange market is spread across banks, institutions, brokers and electronic trading venues. Activity runs across major financial centres and time zones.
Why exchange rates move
Currency prices respond to interest rates, inflation expectations, economic growth, trade and capital flows, central-bank policy and changes in risk appetite.
Short-term moves can be noisy. A currency can strengthen or weaken for reasons that have little to do with a simple view of whether an economy is doing well.
Forex exposure is not one thing
Someone receiving income in another currency, buying foreign assets and trading a leveraged currency contract all have foreign-exchange exposure, but the risks are very different.
It helps to separate the currency itself from the product used to access it. The market, the provider, the leverage and the fee structure should be analysed separately.
General information only. Investment products can lose value, and terms, fees and regulation can change.