Spot forex settles in two business days (T+2), but most institutional volume is actually forward or swap business. A forward rate is not a forecast — it is the spot rate adjusted by the interest rate differential between the two currencies, a relationship enforced by covered interest parity.

Forward points are quoted in pips and added to (or subtracted from) spot. If the base currency has a lower interest rate than the quote currency, the forward trades at a premium; if higher, at a discount.

Premium: forward points positive — base currency rate < quote currency rate
Discount: forward points negative — base currency rate > quote currency rate
Carry: holding the higher-yielding currency earns the differential, but spot risk can erase it

Tenor	EUR/USD spot	Forward points	Outright
1 month	1.0850	+12	1.0862
3 month	1.0850	+38	1.0888
1 year	1.0850	+155	1.1005