The forex market is a global, decentralized over-the-counter market that no single person, bank, or government controls. In April 2025, global over-the-counter forex turnover reached $9.6 trillion per day, according to the Bank for International Settlements (BIS). Prices come from the combined activity of dealer banks, central banks, institutional investors, hedge funds, companies, brokers, governments, and other buyers and sellers.
Large dealer banks have the greatest short-term influence because they provide liquidity and handle large currency orders. Central banks can also move prices sharply through interest-rate decisions, monetary policy, and direct intervention.
Who Has the Most Influence over Forex Prices?
Different market participants influence forex prices in different ways.
| Participant | Main influence on the forex market |
|---|---|
| Large dealer banks | Quote prices, match orders, manage liquidity, and execute large institutional trades |
| Central banks | Set interest rates, manage money supply, and sometimes intervene in currency markets |
| Institutional investors | Create large currency flows when investing or hedging internationally |
| Hedge funds and proprietary trading firms | Trade actively using macroeconomic, quantitative, and technical strategies |
| Multinational companies | Buy and sell currencies to pay suppliers, receive revenue, and manage exchange-rate risk |
| Retail forex brokers | Provide access to individual traders and may act as the trader's direct counterparty |
| Regulators | Supervise firms and trading conduct within their jurisdictions |
The BIS reported that inter-dealer transactions made up 46% of forex turnover in April 2025. Trading with other financial institutions accounted for another 50%. Those figures put banks and other financial institutions at the center of daily forex activity.
Do Banks Control the Forex Market?
Large banks do not control the entire forex market, but they are its main liquidity providers and short-term price makers.
Major banks run foreign exchange dealing desks that:
- Quote bid and ask prices
- Execute trades for companies, funds, and other banks
- Manage currency inventories and trading risk
- Provide liquidity during normal market conditions
- Change prices when order flow becomes unusually large or one-sided
Forex does not operate through one central order book. Banks quote prices through dealer platforms, electronic communication networks, and direct relationships with customers and other institutions.
A bank can affect the price available to its own customers. It cannot permanently set the worldwide value of a currency because other banks, funds, companies, and traders continue to trade through different venues.
Forex trading is also concentrated in a small number of financial centres. In April 2025, sales desks in the United Kingdom, United States, Singapore, and Hong Kong handled about 75% of global forex trading. The United Kingdom remained the largest centre, followed by the United States and Singapore.
Do Central Banks Control Currency Prices?
Central banks can move currency prices sharply, but they usually cannot control them on their own.
They influence exchange rates through several channels:
Interest-rate decisions Higher interest rates can attract foreign capital and support a currency. Lower rates can reduce demand for it.
Forward guidance Statements about future policy can move currency markets before a central bank changes its official rate.
Quantitative easing and tightening Changes to a central bank's balance sheet can affect liquidity, bond yields, and demand for a currency.
Foreign-exchange intervention A central bank can buy or sell its own currency, or another currency, to influence the exchange rate.
Currency regimes Governments may allow currencies to float freely or use managed floats, fixed exchange rates, or currency bands.
A central bank may struggle to maintain a desired exchange rate if market conditions move against it. The Federal Reserve says that the value of the U.S. dollar is determined in foreign exchange markets. It also states that neither the Federal Reserve nor the U.S. Treasury targets a specific dollar exchange rate.
Intervention is more likely to have a lasting effect when it is supported by interest-rate policy, credible economic policy, and sufficient foreign-exchange reserves.
What Role Does the U.S. Dollar Play?
The U.S. dollar is the main currency in global forex trading. The BIS reported that the dollar was on one side of 89.2% of all foreign exchange trades in April 2025. The euro was on one side of 28.9% of trades, while the Japanese yen appeared on one side of 16.8%.
The percentages add up to more than 100% because every forex transaction involves two currencies.
The dollar's role gives U.S. interest-rate decisions and economic data a broad effect on currency markets. Traders often watch:
- Federal Reserve interest-rate decisions
- U.S. inflation data
- U.S. employment reports
- Treasury bond yields
- Demand for dollar funding
- Market sentiment during financial stress
The United States does not control every currency pair. The European Central Bank, Bank of Japan, Bank of England, Swiss National Bank, and other central banks can have a strong effect on their own currencies.
Who Controls the Forex Market for Retail Traders?
For many retail traders, the broker or dealer controls the immediate trading environment.
When you trade off-exchange retail forex, you often trade directly against the dealer instead of accessing a central exchange. The dealer may provide the platform, display prices, execute orders, and act as the counterparty.
The U.S. Commodity Futures Trading Commission warns that retail customers trading OTC forex are not connecting to a live exchange. They are trading against the dealer.
That creates two separate questions:
- Who influences the global forex market? Banks, central banks, institutional investors, companies, funds, and other market participants.
- Who controls your retail trading conditions? Your broker or dealer, subject to the rules that apply in its jurisdiction.
A retail broker cannot normally set the global EUR/USD exchange rate. It can control the conditions of its own service, including spreads, margin requirements, order execution, and platform availability.
In the United States, retail forex dealers and intermediaries face registration, capital, disclosure, and conduct requirements under the applicable regulatory framework.
Can Hedge Funds or Large Traders Manipulate Forex?
Large funds and banks can move a currency pair temporarily, especially when liquidity is limited, but they cannot normally control it indefinitely.
Large orders can lead to:
- Short-term price spikes
- Fast reversals
- Stop-loss cascades
- Wider spreads
- Greater volatility around economic announcements
A temporary price move is different from long-term control. Over time, currency prices respond to interest rates, economic growth, inflation, trade flows, political risk, capital movements, and market expectations.
The size and international reach of the forex market make it difficult for one private trader or institution to control exchange rates consistently.
Who Regulates the Forex Market?
There is no single global forex regulator. National and regional authorities supervise firms and trading activity within their own jurisdictions.
Examples include:
- Commodity Futures Trading Commission and National Futures Association in the United States
- Financial Conduct Authority in the United Kingdom
- European Securities and Markets Authority, together with national regulators, in the European Union
- Australian Securities and Investments Commission in Australia
- Monetary Authority of Singapore in Singapore
- Japanese Financial Services Agency in Japan
The BIS supports international cooperation and publishes global market data. It does not operate a central forex exchange or set currency prices.
The FX Global Code sets principles for conduct in the wholesale forex market. It is a code of market practice, not a global system for controlling prices.
What Actually Moves the Forex Market?
The main forces behind currency movements include:
- Interest-rate expectations
- Inflation and economic growth
- Central-bank policy
- Employment and economic data
- International trade and investment flows
- Political and geopolitical risk
- Commodity prices
- Market positioning and liquidity
- Demand for safe-haven currencies
- Corporate and institutional hedging
A currency pair rises when demand for the base currency increases compared with demand for the quote currency. EUR/USD rises when the euro strengthens against the dollar, the dollar weakens against the euro, or both happen at the same time.
The Bottom Line
No single entity controls the forex market. Large dealer banks have the greatest role in liquidity and short-term price formation. Central banks influence currencies through monetary policy and intervention. Institutional investors, companies, hedge funds, and other traders add further buying and selling pressure.
For retail traders, the broker or dealer controls the immediate platform, pricing conditions, and execution process. For the global market, exchange rates come from the combined effect of monetary policy, economic data, capital flows, and market demand.