Fundamental Analysis involves learning about and studying different economic factors of a particular country in order to predict the future price of its currency. Studying about the monetary policies, economic conditions and political situation of a country helps fundamental analysts in forecasting the value of its currency. Inflation, unemployment and interest are good indicators of economic health of a country and main focus of fundamental analysts. Fundamental analysis is based on some important indicators like Producer Price Index (PPI), Gross Domestic Product (GDP) and Consumer Price Index (CPI). Fundamental analysis is good for long term trades.

FXMan

The forex fundamental analyst identifies and measures factors that determine the intrinsic value of a financial instrument, such as the general economic and political environment, and including any that affect supply and demand for the underlying product or service. If there is a decrease in supply but the level of demand remains the same, then there will be an increase in market prices. An increase in supply produces the opposite effect.Once the analyst estimates intrinsic value, he compares it to the current exchange rate and decides whether the currency ought to rise or fall.

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Fundamental Analysis is irrelevant to forex trading. In Forex you need to react fast, not base your trades on things that may or may not come into effect in timeframe of months.

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In order to get benefit out of trading you are required to have a calendar at hand.
This calendar should provide you with the upcoming events capable to influence currency behavior.

I`ve found one that is clearly designed and contains all the necessary info.
Click Economic Calendar to view it and use in your fundamental analysis.

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The fundamentalist analysis studies the cause of market movement, while the technician studies the effect. So every trader should understand them both, regardless which they think is best, don’t you think?

The two primary approaches of analyzing currency markets are fundamental analysis and technical analysis. Fundamentals focus on financial and economic theories, as well as political developments to determine forces of supply and demand. One clear point of distinction between fundamentals and technical’s is that fundamental analysis studies the causes of forex market movements, while technical analysis studies the effects of market movements.

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