Can somebody explain in simple terms, what causes currency swing?

Question

What series of events causes, for example, the Euro's value to change with respect to the dollar?

Some idea of the short- and long-term economic implications of currency swing would also be great.

Answer 1

"Currency fluctuations are caused by changes in the market price of any currency.

Factors which lead to currency fluctuations include:

Changes in a country’s interest rate – or rumours of a change;
Perceived strength of a country’s economy;
Unemployment levels;
Perceived social and political stability – or lack thereof;
Increased market demand for a specific currency;
Reduced market demand for a specific currency. "

"Currency exchange rates are set by the buyers and sellers of currency. Unlike stocks, which are traded at a central location where buyers and sellers meet, currency exchanges are usually negotiated between banks, currency brokers and investors. The relative value of a currency is determined by the successful meeting of a “bid” and “ask” price for that specific currency.

Demand for a specific currency usually increases the currency value. Likewise, if a currency is being sold with little demand for that currency, the value usually drops.

Currency rates are also affected by volume. Higher volume transactions are usually available at better exchange rates than lower volume transactions.

"

Answer 2

This currency trading system is an intermediate term swing-trading program using fractal analysis filtered through a proprietary Fractal Dimension Index (FDI) for directionality. This is a unique program in that it generates signals in a manner unlike all other currently used by system traders. Moreover, the FDI allows for adaptive trading when technical market conditions change.

The included material demonstrates several key components for a successful system:

1) A substantial profit over the period traded.

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4) A high number of consecutive winning trades.

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6) Low draw down.

7) Lack of optimization (no curve fitting).

8) Consistency.

Briefly, the Fractal Trading System identifies fractals in the market that demonstrate high-energy break out possibilities. Borrowing from wavelet theory, we can estimate with substantial accuracy the length and strength of a breakout move and at what price the move will take place. These numbers are projected in “advance,” avoiding the delayed effects of other market indicators such as MACD, RSI, Stochastics, etc…