Forex Trading Currency Pairs 4

Question 1

What does the nickname 'Loonie' refer to in forex trading?

Accepted Answer

USD/CAD

Answer

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?

Accepted Answer

EUR/USD rate falls

Answer

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?

Accepted Answer

Global commodity prices

Answer

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?

Accepted Answer

NZD

Answer

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?

Accepted Answer

USD/CAD

Answer

Canada is a major oil exporter, so USD/CAD is highly sensitive to crude oil price movements — rising oil typically strengthens CAD.

Forex Trading Practice Test