Central banks play a pivotal role in shaping the dynamics of the foreign exchange (Forex) market. While traders and investors drive daily transactions, the actions of central banks set the stage for major currency movements. Understanding their influence is critical, particularly in a market valued at over $6.6 trillion in daily trading volume (BIS, 2019). Below, we explore the primary ways central banks impact forex market trends and strategies. Central Banks and Monetary Policy One of the core responsibilities of central banks is to implement monetary policy, which directly affects a country’s currency value. Through tools such as interest rate adjustments, quantitative easing (or tightening), and open market operations, central…