The foreign exchange (forex) market is the most information-sensitive financial market in the world. Every tick in currency prices is driven by the flow of information economic data, geopolitical developments, central bank decisions, and more. But what exactly determines the value of one currency relative to another?

If you're trading with leverage through a prop firm or pursuing forex-funded accounts like those at IC Funded, understanding what drives currency rates is critical to building a successful strategy.

In a word information. Currencies move based on a nonstop flow of data, events, and sentiment.

While all financial markets are driven by information, the forex market is uniquely complex. That’s because it doesn’t just measure the strength of one asset it compares the economic and political outlook of two or more entire countries.

For anyone pursuing a prop firm challenge or managing capital in a Funded account at IC Funded, mastering these cross-currents isn’t optional , it’s fundamental.

📊 The Two Pillars of Currency Movement: Fundamentals and Technicals

🔹 Fundamentals: Macro Forces That Drive Value

“Fundamentals” in forex refer to the underlying economic and geopolitical factors that influence a nation’s currency. These include:

• Economic data reports (e.g. GDP, CPI, jobs)
• Interest rate policy from central banks
• Trade and investment flows
• Political confidence and geopolitical risks

For example, a strong GDP report or rising inflation can lead to higher interest rates, which often increases demand for a currency. But if there's political unrest, that same currency may weaken despite solid data, because confidence is shaken.

Technicals: Charts, Patterns, and Price Behavior

Even with a solid grasp of the fundamentals, many traders rely heavily on technical analysis to refine entries, exits, and risk management. This involves:

• Chart patterns (e.g. support/resistance, breakouts)
• Indicators (e.g. moving averages, RSI, MACD)
• Price behavior and momentum shifts

In fact, technicals become even more valuable in forex because of the sheer volume of information flooding the market. Price action can often act as a real-time indicator of how traders are digesting news long before economic headlines confirm it.

Whether you're a pattern trader or use algo tools, technical analysis is an essential toolkit for navigating high-volatility conditions especially during evaluations where precision matters.

The Market Dynamic: Human Behavior in Motion

There’s one more factor to consider: the market dynamic itself. At any moment, the forex market is a reflection of thousands of traders each interpreting data, applying different strategies, and reacting to evolving risk conditions.

That means even the best trade ideas can temporarily fail because of:

• Unexpected liquidity flows
• News shocks
• Crowded positions or sentiment shifts

This is why prop traders need to remain agile and emotionally neutral. It’s not just about being right it’s about managing risk and adapting fast, traits we look for at IC Funded.

Key Takeaway: Master the Flow of Information

If you're serious about passing a prop firm evaluation or managing a funded account, your edge will come from your ability to:

• Understand macroeconomic fundamentals
• Apply technical tools effectively
• Respect the behavior of the broader market

At IC Funded, we’re not just funding traders we’re building market professionals who can survive and thrive in any condition.

🎯 Take the Next Step

Ready to put your skills to the test?
Start your IC Funded Evaluation today and prove you can navigate the real-world forces that move the currency market.