The end of the trading week has a noticeable impact on currency markets due to profit-taking, position adjustments, and reduced liquidity. Many traders, especially institutional investors, close their positions on Friday to avoid weekend risk, which can lead to sudden price swings. This profit-taking often results in temporary reversals or increased volatility.

Liquidity tends to drop as the trading day progresses, especially after the London session closes. With fewer participants, price movements can become erratic, making sudden spikes or gaps easier. This is particularly true for exotic currency pairs or low-volume markets.

Additionally, traders may hedge their positions ahead of key weekend events, such as geopolitical developments or economic data releases. This precautionary behaviour can lead to unusual price action, especially if investors expect significant news over the weekend.

Moreover, the end of the trading week is crucial for carry trades. Traders holding high-yielding currencies may choose to unwind their positions before the weekend, affecting interest rate differentials and exchange rates.

Understanding these dynamics can help traders make informed decisions, avoiding unnecessary risks while capitalizing on end-of-week trends. Proper risk management and awareness of liquidity shifts are essential for efficiently navigating Friday's forex market.