M2 is a money supply measure that refers to a specific portion of the money in an economy.
Economists use M followed by a number to denote different parts of the money supply. The precise application of this money supply indicator varies by economy: in the United Kingdom, for example, M2 is rarely used, and M4 is the primary indicator.
M1 is the total amount of cash and current account balances in the United States. M2 is the same as M1, but it includes savings accounts, money market funds, and other deposits. M2 is broadly defined to include money that is not completely liquid but can be quickly converted into cash or returned to current accounts. This is frequently referred to as 'near money.'

M2 is a key economic indicator used in forex trading to measure a country's money supply. It includes M1 (cash, coins, and checking deposits) plus near-money assets such as savings accounts, time deposits, and money market securities. M2 represents the total liquidity available in an economy, excluding large-time deposits and institutional money market funds.

Forex traders monitor M2 as it reflects the availability of money for spending and investment, influencing inflation and economic growth. Central banks often use M2 to guide monetary policy. A rising M2 indicates increased money circulation, which may lead to inflation, while a declining M2 signals tightening liquidity, potentially slowing economic activity. Understanding M2 helps traders anticipate currency movements based on economic trends.