Forex Trading – Learning the Aspects That Can Affect the Price of the USD

 

Forex training is the school where you will learn the important things you need to know about forex trading. They focused on teaching you how to analyze the market so that you will be able to discern the patterns and its usual trends for proper and correct predictions. However, some fundamental things that are actually causing the market movement are left unexplained.

One of them is the deliberate interference of the Federal Reserve. It is interesting to note how the policy and decision making of the government are directly affecting our USD. They are doing it to maintain and improve the economic status of the country. If they will not do it, all businesses will of course fall down and the domino effect is the one that they are avoiding as much as they could.

There are so many factors that have direct impact on the value of US dollars. One example is the demand and supply of petroleum oil. This is one element that affects the money market. The OPEC has the power to control this field. Another is the interest rates plus there are thousands of factors that can influence the USD but we will just focus on how the interest rates can change its worth.

It is remarkable to realize that the Federal Reserve has direct involvement on this. But this is the responsibility of the FEDS: to manage the value of the USD. It is done when the Federal Reserve can anticipate an economic burnt up. This means that over supply of money will incur and inflation will be the end result. To avoid this thing to happen, FEDS will remove the over supply of money by selling debts. If the demand for money is still the same and yet the supply has decreased, the consequence is increased value of the USD. If the US dollars have increased in value, the FEDS can then charge higher interest rates.

If on the other hand, the interest rates have gone too high, possible effect would be closing up of some establishments. To negate this likely event, the FEDS will lower down the charges of interest rates by buying debts and holding them. In so doing, the money supply will increase and if the demand for it is still the same, the value of USD will decrease thus, interest rates can be reduced.

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