Let's look at Euro US Dollar to talk about FX specific terminology. Suppose you sold Euros at 1.0950 a day earlier, and the current Euro US Dollar quote is 1.0890.

What has happened since the trade inception? The price of a Euro expressed in US Dollars has declined, which means the Euro has weakened or depreciated relative to the US Dollar. Conversely, this also means that the US Dollar has strengthened or appreciated relative Euro since you entered a short position on Euros since you initially sold it. This result in a positive profit for the trade.

When you sold one Euro earlier, you received 1.0950 US Dollars.

Now to buy back that same one Euro, you only need to pay 1.0890 US Dollars. The difference of 0.0060 US Dollars represents your profit per one Euro that was initially sold.

However, looking at this one currency pair alone, we cannot determine whether this move was driven by Euro weakness or US Dollar strength since either of these factors would drive the exchange rate in the same direction.

To gain more insight, we need to examine other currency pairs. For example, you might look to compare US Dollar against other major currencies such as British Pounds, Japanese Yen, or Aussie Dollar, and compare the Euro against other currencies like British Pound, Swiss Franc, Japanese Yen, to see how each of these currencies performed against other major currencies.

Alternatively, we can look at currency indices. The US Dollar Index, DXY measures the value of the US Dollar against a basket of major currencies, including the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Kroner, and Swiss Frank. If the US Dollar index is rising, it indicates broad based US Dollar strength. Similarly, Euro indexes tracks the Euro's performance against a weighted basket of currencies. A rising Euro index suggests broad Euro strength while a decline points to overall weakness.

By analyzing these indices or comparing additional currency pairs, we can better understand whether the movement in Euro, US Dollar was driven by broader US Dollar dynamics, Euro specific factors, or a combination of both.