As previously mentioned, currencies fluctuate relative to other currencies. Take two of the most common currency pairs, the EUR/USD (the price for Euros in US dollars) and the GBP/USD (the price for The Great British Pound in US dollars). If there is positive economic news in the Euro zone and negative economic news in the United Kingdom, it is very conceivable that the EUR/USD would go up in value, meaning it is now more expensive in US dollars to purchase one EUR, and that the GBP/USD would go down in value, meaning it is now cheaper to buy Great British Pounds with US dollars. In this scenario, the US dollar went up in value against one currency and down in relation to another. It is important to understand this idea that currency pairs move mostly independently from one another. Currency pairs with similar currencies on one side (like the USD in the previous example) can be similarly affected by news regarding the common currency, but the crucial concept is that they don’t have to be.
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