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🌊 GLOBAL LIQUIDITY — THE INVISIBLE FORCE BEHIND EVERY FX MOVE
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💡 THE CORE IDEA
Currencies don’t transfer solely due to information.
They transfer due to how a lot cash exists globally and how simply it flows.
When world liquidity expands, threat currencies rise.
When it contracts, every part scrambles for security.
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📊 WHAT IS GLOBAL LIQUIDITY?
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World liquidity represents the full sum of money out there within the world monetary system.
Fundamental drivers:
Central financial institution stability sheets (Fed, ECB, BoJ, PBoC)
Cash provide progress (M2)
Credit score availability
Cross-border capital flows
Extra liquidity = extra risk-taking.
Much less liquidity = compelled deleveraging.
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⚠️ WHY GLOBAL LIQUIDITY MOVES FX
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1️⃣ Threat Urge for food Management
Excessive liquidity → buyers chase yield → threat currencies strengthen (AUD, NZD, EM FX).
2️⃣ USD Dominance
World liquidity contraction often means USD scarcity → USD strengthens aggressively.
3️⃣ Pressured Place Unwinds
When liquidity dries up, leveraged positions shut → violent FX strikes.
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📉 LIQUIDITY CONTRACTION PHASE
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Brought on by:
Results:
USD strengthens
JPY & CHF strengthen
EM currencies collapse
Carry trades unwind
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📈 LIQUIDITY EXPANSION PHASE
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Brought on by:
Fee cuts
QE
Fiscal stimulus
Credit score easing
Results:
USD weakens
Threat currencies rally
Commodities rise
Carry trades explode
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📊 REAL-WORLD EXAMPLES
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🌍 2020–2021
🌍 2022
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⚙️ PRO TIP — TRACK THESE INDICATORS
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Fed + ECB + BoJ stability sheet developments
World M2 progress fee
Cross-currency foundation swaps
Stress in funding markets
Sudden USD energy with out information
These often sign liquidity shifts earlier than FX developments explode.
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🚀 TAKEAWAY
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FX is a liquidity market first — a fundamentals market second.
When liquidity flows, currencies development easily.
When liquidity breaks, currencies transfer violently.
Should you perceive world liquidity,
you perceive why developments start, speed up, and finish.
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📢 JOIN MY MQL5 CHANNEL FOR MORE FOREX FUNDAMENTALS AND REAL-WORLD TRADING INSIGHTS:
👉 https://www.mql5.com/en/channels/issam_kassas
