A short squeeze in forex is a situation where traders who have taken short positions in a particular currency pair are forced to buy the pair in order to limit their losses, causing the price to rise sharply. This can occur when there is unexpected positive news or a change in market sentiment towards the currency, leading to an increase in demand for the currency. As traders rush to buy back the currency they sold short, it can create a self-reinforcing cycle of buying that drives the price even higher. Short squeezes can result in large losses for traders who are caught on the wrong side of the market, and can also lead to increased volatility in the currency pair.