International commerce has all but dissolved the traditional boundaries between nations. Through trade, countries are interconnected to such an extent that it is difficult to distinguish each nation's products. Despite this lack of distinction in commerce, most countries still have its own national currency. The Forex market allows different countries to conduct business with each other and permits an acceptable form of exchange for both parties. It is essential to international trade.

"Forex" or "FX" means foreign currency exchange, and foreign exchange market is the international network of major foreign exchange dealers engaged in high-volume trading around the world. It is the simultaneous selling of one nation's currency and buying of another nation's currency. Forex market permits transfers of purchasing power denominated in one currency to another, and foreign exchange is traded in two distinctive ways: over an organized exchange and over-the-counter (OTC). Three traditional instruments in the OTC market are spot, outright forwards, and foreign exchange (FX) swaps. The largest foreign exchange activity is the spot exchange between the US dollar and the other majors such as Euro, British Pound, Japanese Yen, Swiss Franc, Canadian Dollar, and Australian Dollar. These currencies make up 85% of the spot transactions conducted worldwide.

The US dollar is the centerpiece of the Forex market and is normally considered the base currency for quotes. Its extensive use by the international community demonstrates its importance as a currency vehicle. Most currency pairs are traded against the dollar, rather than traded directly against each other. This simplifies the FX market by reducing the number of currency pairs and also allows greater liquidity, especially for the exotic currencies.

Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation, and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying their currency in order to raise the price; known as Central Bank intervention. Any of these factors, as well as large market orders, can cause volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time.