Currency market is a social system like all financial markets.
Currency market has a central role in the financial system.
Many of us fail to realize this that currency market comprises thousands of thousands of people.
Currency price is just the reflection of the collective actions that we take in the market.
Psychology plays a majority role when we make the decisions.
I have a written a blog post on how psychology effects the currency market.
Traditional economics models of investors analyzing information rationally has limitations.
There are many things that the traditional model cannot explain in the currency market.
We need to understand the Prospect Theory that explains many things that happen in the currency market.
News and rumors play a very important role in the currency market.
In the short run the currency market is reacting to the herd mentality.