Market sentiment refers to the overall attitude of traders and investors toward a particular currency or the forex market as a whole. It is driven by various factors, including economic data releases, geopolitical events, and central bank policies. Sentiment can be bullish (positive) or bearish (negative) and often influences market trends. Traders use sentiment indicators, such as the Commitment of Traders (COT) report and sentiment analysis tools, to gauge market mood and make informed decisions. Understanding market sentiment can provide insights into potential price movements, as crowded trades or extreme sentiment levels can lead to reversals. By aligning their strategies with prevailing sentiment, traders can enhance their chances of success in the dynamic forex market.