Supply and demand is the fundamental principle that determines the price of assets in financial markets. When demand exceeds supply, prices rise, and when supply exceeds demand, prices fall.
Understanding supply and demand helps traders predict price movements and market trends.
When demand for a currency rises, its value strengthens, while excess supply weakens it. Major economic events can shift supply and demand dynamics rapidly.
Test your knowledge of supply and demand and its impact on forex trading with the following questions:
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