The traders all over the world trade about $3trillion daily in the world foreign exchange markets. The markets are open all over the world 24 hours a day and keep on absorbing new traders every day.
Now if you were to make some sense of what is happening in the currency markets and why there are swings across currency trading combinations then you will have to pay heed to a lot of economic news. There are several economic factors that change the view of the traders towards a particular currency.
Almost anywhere you go the most common term that you will hear is the fed. Fed is short for Federal Reserve and this is the central bank of the United States. Now the chairman of the Fed always has the best interests of the economy so as to steer it clear of recession and help the people get respite from inflation. Any decision the fed makes an impression on how the US currency behaves. That said, you need to understand how each and every statement of the fed impacts the foreign exchange market.
The price of a currency is a factor of how the economy is shaping up. If the economy is not doing well, the price of the currency reflects that. The economic foundation of the country has to be sound for the currency to be strong. However whether you believe it or no, the currency traders pay particular attention to interest rates in the market and they are best indicators of the economic health of the country and also affect the general consumer market the most.
So read and absorb all economic news, listen to experts and then take a judgment call on the currency.