Can anyone explain this to me?
The economic releases give information on how an economy is doing. It reports on employment levels, consumer spending levels, industrial output, inflation rates, etc, etc. This data can also reflect on how government and central bank policies are working (or not).
This overall picture of a country’s economy influences investors’ decisions whether to invest funds in that country’s assets and what to expect from interest rate developments in that currency.
In order to buy assets denominated in that country’s currency one has to buy that currency with another currency, thus creating buying pressure for that currency. And if the demand is sufficient then the value of that currency will increase relative to other currencies.
And if the economic data suggests that interest rates may increase then there will also be a demand to invest in assets denominated in that currency such as USD bonds which pay interest to the bearers of these instruments.
In practice, though, the reaction to economic data releases in the calendar is based on how the market predicts what the possible impact of the currency’s value will be and therefore the reaction can sometimes be quite violent and fast as everyone tries to get in at the best price possible! 
You have to remember that the forex market contains a lot of purely speculative trading (that is why markets are so much quieter during holiday periods) and therefore the reaction to data is swift and often volatile if parties have differing views or if there is some unclear interpretation of its meaning. Regular economic calendar releases often also include corrections to previous month’s data, which can also create volatility.
Another factor is that individual traders react to the immediate release of data but institutional participants also have large analytical departments behind them who will digest the fresh information and update their overall longer term view and advise accordingly - and this may well fuel or temper the original view.
Some economic releases are much more sensitive than others and this often depends on what the current govt and/or central bank policies are. For example, in the US right now, we are interested in data that shows how the economy is rising out of the COVID effects and when the central bank is likely to raise interest rates in response to current inflationary pressures. So related releases such as the NFP (employment), retail sales (consumer spending), CPI (inflation rate), etc will be especially under the spotlight…
This is a very simplified answer but hopefully gives some idea of what this is about?
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Could someone please clarify this to me?
its a very nice reply from all there is. got so many fine lines with exact information, thanks SIR for your nice post. happy trading
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Forecasts through EC can really affect the trading sentiments of buyers and sellers on forex but the one who knows how to beat the market by proper timing is the real trader.
i always use Forex factory economic calendar above all during news , from all resources i like this source to bring good information and data.
FF Factory is got but it never works for all time , you must need to change for better result after passing sometimes.
for economic calendar i just use investing. There are major news that affect the market and create huge fluctuation in price like Non-farm Payroll, Central Bank decisions, GDP, CPI. You can read them more in detail here.
Very well explained buddy! Thanks for such an informative reply! 
Solid answer here. Covers the important points.