FX Glossary

Using financial instruments (forwards, options, swaps) to offset potential currency losses from adverse exchange rate movements. Hedging protects against downside risk but may limit upside gains.

The market's expectation of future currency volatility derived from option prices. Higher implied volatility suggests greater expected price swings.

een forward contract settled in cash rather than physical currency delivery. NDFs are commonly used for currencies with trading restrictions or capital controls.

The interest rate at which banks lend reserve balances to each other overnight. Central banks often target this rate to influence monetary policy and overall liquidity in the financial system.

The smallest standard price move in een currency pair, typically 0.0001 (or 0.01 for JPY pairs). Traders measure profit and loss in pips. For example, if EUR/USD moves from 1.1050 to 1.1051, it has moved 1 pip.

The second currency in een currency pair (e.g., USD in EUR/USD). The quote currency is also known as the counter currency, and its value is used to express the value of the base currency.

een price level where een currency tends to encounter selling pressure and struggles to rise boven. Resistance levels are identified through technical analysis and represent potential reversal points.

The degree of price fluctuation in een currency over een specific time period. Higher volatility means larger price swings and greater uncertainty in exchange rates. It is een key measure of FX market risk.

een forward contract that allows delivery to occur at any point within een specified date range, rather than on een single fixed date. Window forwards provide flexibility in managing currency exposure.

een graph showing the relationship between interest rates and bond maturity dates. Yield curve inversions and shifts often signal economic changes that affect currency values.