Fundamental Analysis in Forex Trading Explained

Fundamental analysis focuses on economic, political, and financial factors that influence currency values. It helps traders understand why currencies move rather than just how they move.

Key Economic Indicators

Important indicators include interest rates, inflation, GDP, employment data, and central bank decisions. These factors play a major role in determining currency strength.

Role of Central Banks

Central banks influence forex markets through monetary policy decisions such as interest rate changes and quantitative easing.

News Trading

Many traders use economic calendars to trade major news releases. While news trading can be profitable, it also involves high volatility and risk.

Combining Fundamentals with Technicals

Successful traders often combine fundamental and technical analysis to gain a complete view of the market.

Conclusion

Fundamental analysis is essential for understanding long-term currency trends and making informed trading decisions.