Forex Trading Currency Pairs 4 — Questions and Answers
Question 1: What does the nickname 'Loonie' refer to in forex trading?
- AUD/USD
- NZD/USD
- USD/CAD (Correct answer)
- CAD/USD
Correct answer: USD/CAD
USD/CAD is nicknamed 'Loonie' after the Canadian dollar, which features a loon bird on its coin.
Question 2: If a trader sells EUR/USD, which outcome would generate a profit?
- EUR appreciates against USD
- USD depreciates against EUR
- EUR/USD rate falls (Correct answer)
- EUR/USD rate rises
Correct answer: EUR/USD rate falls
Selling EUR/USD profits when the pair's rate falls, meaning EUR weakens relative to USD.
Question 3: Which factor most directly impacts the value of commodity-linked currencies like AUD and CAD?
- Federal Reserve policy
- Global commodity prices (Correct answer)
- Eurozone inflation data
- Chinese real estate market
Correct answer: Global commodity prices
AUD and CAD are heavily influenced by commodity prices like iron ore and crude oil due to their countries' export-driven economies.
Question 4: What is the base currency in the pair NZD/USD?
- USD
- NZD (Correct answer)
- Both are base currencies
- Neither is a base currency
Correct answer: NZD
The base currency is always the first currency listed in a pair, making NZD the base currency in NZD/USD.
Question 5: Which of the following pairs would be most affected by changes in oil prices?
- EUR/GBP
- USD/CAD (Correct answer)
- AUD/NZD
- EUR/CHF
Correct answer: USD/CAD
Canada is a major oil exporter, so USD/CAD is highly sensitive to crude oil price movements — rising oil typically strengthens CAD.
Question 6: A trader notices EUR/USD is at 1.1000 and sets a take-profit 150 pips above entry. What is the target price?
- 1.1150 (Correct answer)
- 1.0850
- 1.1015
- 1.2500
Correct answer: 1.1150
Adding 150 pips (0.0150) to 1.1000 gives a take-profit target of 1.1150.
Question 7: What is the typical market convention for quoting EUR against USD?
- USD is always the base currency
- EUR is always the base currency (Correct answer)
- Whichever is stronger becomes the base
- They alternate based on trading session
Correct answer: EUR is always the base currency
By market convention, EUR is always listed as the base currency in the EUR/USD pair, regardless of relative value.
Forex Trading Currency Pairs 4
What does the nickname 'Loonie' refer to in forex trading?