This chapter offers a thorough examination of the foreign exchange (Forex) market, underscoring its pivotal role as the largest and most liquid component of the global financial system. The analysis delves into the complex interplay of factors that drive currency valuations, such as economic fundamentals, interest rate differentials, capital flows, and geopolitical events. Furthermore, the chapter explores both theoretical frameworks for understanding exchange rates and practical trading strategies, illustrating their mechanics and associated risks. Historical case studies of significant currency events are presented to demonstrate the dynamic and often volatile nature of Forex in practice.