Fundamental Analysis

Fundamental analysis is a method of analyzing the financial market by studying and evaluating economic, social, and political forces that could impact an asset's value. It is used across various markets, including stocks, forex, and commodities.

The goal is to determine whether an asset is overvalued or undervalued based on its fundamental characteristics.

When performing fundamental analysis, especially in the context of forex trading, traders should check a variety of economic, financial, and qualitative factors to evaluate the intrinsic value of a currency. It includes, for example, following interest and inflation rates, Gross Domestic Product (GDP) and Employment Data reports. Additionally, traders may consider central bank policies, political events, and economic reports.

By analyzing these factors, traders can get a sense of which currencies might strengthen or weaken.

Apart from fundamental analysis, traders also often use a technical one. Fundamental analysis helps understand the broader economic and financial conditions affecting an asset, while technical analysis focuses on price trends and patterns to make trading decisions.

Successful traders and investors often combine both approaches to make more informed decisions and develop strong trading strategies.