Economic Indicators: Reports on GDP, employment, inflation, and trade balances provide insight into a country's economic health, affecting currency values.

Interest Rates: Changes in interest rates set by central banks impact currency attractiveness. Higher interest rates often lead to a stronger currency as they attract foreign investment.

Political Stability: Countries with stable governments and strong institutions are more likely to attract foreign investment, boosting their currency value.

Market Sentiment: Traders’ perceptions and reactions to news, events, or data can lead to rapid changes in currency prices.

Supply and Demand: The basic principle of supply and demand plays a crucial role. If more traders want to buy a currency than sell it, its value increases.

Geopolitical Events: Events like elections, wars, or natural disasters can create uncertainty and impact currency values.

Speculation: Traders buying or selling currencies based on predictions can lead to volatility in currency prices.