Fundamental Analysis

What Is Forex Fundamental Analysis? Fundamental analysis in Forex involves evaluating the economic, financial, and political factors that influence currency prices. The goal is to determine the intrinsic value of a currency and predict its long-term movement. Key Factors in Forex Fundamental Analysis   FACTOR IMPACT Interest Rates Higher rates attract foreign capital, boosting currency value Inflation Moderate inflation supports growth; high inflation weakens a currency GDP Growth Strong economic growth = stronger currency Employment Data More jobs = healthier economy = stronger currency Trade Balance A surplus strengthens the currency; a deficit weakens it Central Bank Policies Actions (like rate hikes or QE) can heavily influence currencies Geopolitical Stability Political risk or instability usually weakens a currency Consumer & Business Sentiment Reflects confidence in the economy’s future Important Reports to Watch REPORT REGION RELEVANCE Non-Farm Payrolls (NFP) USA Key job creation report CPI & PPI Global Measures inflation GDP Reports Global Measures economic output Interest Rate Decisions All Set by central banks (e.g., Fed, ECB, BoE) PMI (Purchasing Managers’ Index) Global Measures business activity Why Use Fundamental Analysis in Forex? Identifies long-term trends Helps anticipate central bank moves Complements technical analysis Aids in understanding currency strength/weakness drivers Limitations Doesn’t predict short-term price action well Requires understanding of global macroeconomics Market may not react logically or immediately