To understand who a Forex liquidity provider is, you need to be aware of what liquidity is. In a nutshell, it is the ability to quickly buy/sell goods (currency) at the market price. If there is no such an opportunity, the liquidity is considered low. The lower the difference in prices (both spread and occupancy of the limit order book) and the more trades are made per unit of time, the better the liquidity and vice versa.