Fundamental analysis in forex is the study of economic, political, and social factors that influence the value of a currency.
Instead of looking at charts, traders analyze news, data releases, and global events to predict future price movements.
What is mean by Fundamental Analysis?
It helps traders understand the real reason behind price movements.
Major news events can move the market by hundreds of pips in seconds.
Long-term traders rely heavily on fundamental analysis to predict big trends.
Why is Fundamental Analysis Important?
GDP (Gross Domestic Product) → shows economic growth
CPI (Consumer Price Index) → inflation rate
Unemployment Rate → job strength of a country
Trade Balance → exports vs imports
Key Factors in Fundamental Analysis
Economic Indicators
- Central banks (like Federal Reserve, ECB, Bank of England) set interest rates.
- Higher interest rates = stronger currency.
Interest Rates
Elections, wars, trade agreements, sanctions → can shake currency values.
Political Stability & Events
- Non-Farm Payroll (NFP) – US jobs report (1st Friday every month)
- FOMC Meetings – US Federal Reserve interest rate decisions
- ECB / BOE / BOJ central bank decisions
