The Role of Central Banks in Forex Market Movements Central banks hold immense power in shaping the direction of forex markets. Their decisions on interest rates, monetary policy, and foreign exchange interventions can cause immediate and long-lasting effects on currency valuations. Traders and investors closely watch central bank announcements to anticipate shifts in economic policy and market sentiment. When a central bank raises interest rates, it often strengthens the local currency because higher rates attract foreign capital seeking better returns. Conversely, rate cuts can weaken a currency as investors seek higher yields elsewhere. Beyond interest rates, quantitative easing or tightening also impacts currency supply and demand. Additionally, some central banks actively intervene in forex markets to stabilize or devalue their currency for trade advantages. For example, the Swiss National Bank has a history of direct intervention to control the franc’s value. Understanding a central bank's stance—whether hawkish or dovish—is crucial for traders aiming to anticipate trends, manage risk, and capitalize on opportunities. #CommunityAMA