Currency supply and demand are impacted by interest rates, currency fluctuations, migration, economic strength, and geopolitical risk. Taking advantage of currency exchange rate swings is a lucrative business opportunity. Since currencies are exchanged in pairs, forecasting a decrease in one currency is comparable to forecasting an increase in the other currency.

The forex market is shaped by many interconnected factors that influence currency movements daily. One of the most significant is economic data, such as GDP growth, inflation, employment figures, and interest rates, which reflect the overall health of a country’s economy. Central banks also play a key role through monetary policies and interventions that affect currency supply and demand. Geopolitical events, including elections, conflicts, and trade negotiations, can create volatility by shifting investor confidence. Market sentiment, driven by news, speculation, and risk appetite, often amplifies price swings beyond fundamentals. Additionally, global trade balances, capital flows, and commodity prices contribute to currency fluctuations. Together, these factors make forex highly dynamic, requiring traders to analyse both economic fundamentals and market psychology.