In 1824, Hans Christian Oersted (1777-1851), the Danish physicist, chemist, and electromagnetist, discovered that passing a time-varying current though a coil creates a magnetic field around the coil capable of shifting a compass needle. Faraday and the American physicist Joseph Henry (1797-1878) discovered the complementary effect: a moving magnetic field induces a voltage in an electrical conductor proportional to the rate of change of current.

Consider a coil of wire wound in a helical shape with an air core. This wire coil is an inductor. When this coil, with its associated flux field, is positioned in close proximity to the conductive target, this field establishes electric currents in the target. These are Eddy Currents, which are closed loops of induced current circulating opposite in direction to the current in the coil, generating their own magnetic field.

Eddy Currents normally travel parallel to the coil windings and parallel to the target surface. Eddy Current flow is limited to the area in the target within the inducing magnetic field.