Rising Interest Rates and Their Ripple Effect in Forex Interest rates serve as a cornerstone of currency valuation in the forex market. Central banks adjust these rates to manage inflation, control economic growth, and stabilize national economies. When a country raises its interest rates, it typically attracts more foreign capital as investors chase higher returns, leading to an appreciation of that country’s currency. This movement, however, depends heavily on expectations. If traders anticipate a hike, the currency may strengthen even before the official announcement. Likewise, an unexpected rate pause or cut can cause the currency to weaken rapidly. The U.S. Federal Reserve, European Central Bank, and other major institutions play a pivotal role in setting the tone for global currency movements. Forex participants must stay ahead of interest rate decisions and forward guidance. Economic indicators such as GDP growth, unemployment, and inflation all contribute to rate-setting decisions. By aligning trading strategies with monetary policy trends, traders can better navigate the shifting forex landscape. #CommunityAMA