Impact of Central Bank Policies on Forex Movements Central banks are among the most influential players in the forex market. Their decisions on interest rates, money supply, and economic outlooks can drive significant currency fluctuations. For instance, when a central bank raises interest rates, its currency typically strengthens as higher yields attract foreign capital. Conversely, a rate cut can weaken a currency due to reduced investment appeal. Beyond interest rates, central banks also influence forex through quantitative easing (QE), forward guidance, and market interventions. For example, the U.S. Federal Reserve’s statements often sway not just the dollar but global forex sentiment. Similarly, the European Central Bank and Bank of Japan’s dovish or hawkish tones can shift currency dynamics across continents. Forex traders must stay updated on central bank calendars, meeting minutes, and speeches. Understanding how monetary policy shapes economic confidence and inflation expectations helps traders anticipate movements and position themselves before major policy shifts occur. #CommunityAMA