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How do fiscal policies influence forex trading?

Fiscal policy—government spending and taxation—impacts growth, inflation, and investor confidence. Large deficits can weaken currencies by raising debt concerns, while responsible fiscal policies support stability. Institutions model fiscal trajectories alongside monetary policy. For example, high U.S. deficits often spark debates about USD long-term weakness. Retail traders should follow budget announcements and debt ceiling debates. Benefits: fiscal policy reflects government credibility. Risks: political gridlock creates uncertainty. Fiscal analysis adds another dimension—forex is not just central banks, but also governments shaping economic destiny.