A currency rising, buying more:appreciation, compared with before.
An increase in the value of a currency relative to another currency.
When the euro appreciates against the dollar, it takes more dollars to buy one euro.
In plain words
A currency appreciates when it becomes worth more of another currency than it was before. Because currencies are priced against each other, one currency appreciating always means the other currency in the pair has lost value against it.
See it move
Rate after: the largest here
Why it matters
A trader who holds the currency that appreciates sees a gain measured in the other currency, and one who has sold it sees a loss. Outside trading, it changes what imports, exports and foreign travel cost.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
In an invented example EUR/USD moves from 1.1000 to 1.1100.
- 1Change = 1.1100 − 1.1000 = 0.0100, which is 100 pips
- 20.0100 ÷ 1.1000 = 0.0091, about 0.9%
- 3On one standard lot100 pips × 10 US dollars = 1,000 US dollars
The euro has appreciated by about 0.9% against the dollar, a change of 1,000 US dollars in the value of one standard lot.
A common mistake
A rising EUR/USD does not show that the euro is strong against everything. It says only that the euro gained against the dollar; against the yen or the pound it may have fallen over the same period.
Check yourself
Educational information, not investment advice or a recommendation to trade.