There are lots of papers and books on this topics but haven't seen much specific to forex markets nowadays.

Any recommendation on recent papers or books?


Maureen O’Hara starts her recent paper "High frequency market microstructure" by the following paragraph:

Markets are different now in fundamental ways. High frequency trading (HFT) has clearly made things faster, but viewing the advent of HFT as being only about speed misses the revolution that has happened in markets. From the way traders trade, to the way markets are structured, to the way liquidity and price discovery arise – all are now different in the high frequency world. What is particularly intriguing is the role played by microstructure. One could expect that when things are fast the market structure becomes irrelevant, but the opposite is the case. At very fast speeds, microstructure takes on a starring role.

So you should probably look for research of high frequency trading in FX markets. In particular, you could start from chapter 4 "High-Frequency Trading in FX Markets" of "High-Frequency Trading - New Realities for Traders, Markets and Regulators".

The chapter is authored by Richard B. Olsen, who founded OLSEN in 1985, Alexandre Dupuis, who worked at OLSEN since 2006 and was head of their quantitative research unit, and Anton Golub, a member of OLSEN research team since 2012. They summarize the content of the chapter as follows:

This chapter provides an overview of the landscape and the basic mechanics of the foreign exchange (FX) markets and their organised exchanges. We explain algorithmic trading in the foreign exchange and analyse trading frequencies of different types of market participants. We continue with an overview of the key insights of academic literature of the impact of high-frequency (HF) traders in the foreign exchange market and discuss actual market events where there have been short-term price disruptions. We focus on the behaviour of the high-frequency traders involved.


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