Currencies are always quoted in pairs, since all currency exchange transactions involve the exchange of one currency for another. In international markets, each currency is represented by a three-letter code (ISO). For example, EUR is the euro, USD is the US dollar, GBP is the British pound, JPY is the Japanese yen, and so on.
Currency pairs are usually presented with their respective currency codes side by side (for example, EURUSD represents the Euro-US Dollar currency pair, and EURJPY represents the Euro-Yen currency pair). Sometimes they may be separated by a backslash, a period, a colon, or a space, but they all refer to the same thing.
Now, the order in which currencies are presented in a pair is significant, and it's important to understand it if you want to trade currencies correctly, both long-term and short-term. The first currency in the pair is known as the base currency, while the second is called the quote currency.
Base currency EUR/USD Quote currency
The exchange rate you see, for example, when viewing the EURUSD pair, essentially tells you how much of the second currency (the quote currency, or USD, in this example) is needed to purchase a single unit of the first currency in the pair (the base currency, or EUR).
So, if the EURUSD exchange rate is quoted at 1.01, it means that it takes $1.01 (one dollar and one cent) to buy €1 (a single euro).
When trading currency pairs, you're essentially deciding which of the two currencies in the pair you think will appreciate against the other. In our previous example, if you believe the euro will appreciate against the dollar, you'd "buy" the EUR/USD currency pair at $1.01 per euro. If your prediction were correct, the exchange rate of $1.01 would rise to, say, $1.04, and by closing the position, you'd "sell" those euros at a higher price, keeping your profit.
If, on the other hand, you had predicted that the euro would depreciate against the dollar (in other words, one euro would be worth less than $1.01), you would have "sold" or "shorted" the EUR/USD pair at $1.01 per euro. If you were correct in the latter scenario, the exchange rate of $1.01 would have fallen to, say, $0.98, and by closing the position, you would have "bought back" the euros sold at $1.01 at a lower price, keeping your profit.