Central banks sit at the center of currency markets even when they are not actively buying or selling their own currency. Their interest-rate decisions, liquidity operations, reserve policies, and public comments alter the return investors expect from holding domestic assets. For beginners asking what is forex trading, central bank activity explains why a currency can move sharply even when no obvious commercial transaction has occurred. The market usually reacts to expectations before policy changes become official. Traders compare inflation, employment, growth, and financial conditions with a central bank’s stated objectives.…
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