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Introduction: Forex Fundamental Analysis

Forex trading definitely needs forex analysis to be successful, even if it’s small.  There are two main ways to analyze the situation in the market and find out what to do next: technical analysis and forex fundamentals.  It may seem difficult, but you don’t have to be an expert to make the right decisions and understand the market, just take one step.


Today we will introduce you to the basics of forex analysis.

What is fundamental analysis in forex?


The main difference between these two types of forex analysis is the subject matter.  Technical analysis is based on indicators and signals, and especially requires charts.  Fundamental analysis in forex involves fundamental issues affecting the economy.


In short, the basic analysis of forex is that when a country’s economy is doing well, the value of the currency will rise, and conversely, when the economic situation worsens, the value of the currency will weaken.  Simple, right?  The only major issue is accurately predicting whether the economy is strengthening or weakening.

What are the main factors in forex fundamental analysis?


To ensure the certainty you need in forex fundamental analysis, you need to know the fundamentals that affect currency values.  These factors include labor market indicators (such as unemployment rates and wages), housing market indicators, GDP (gross domestic product), inflation, interest rates, and more.  We will explain about these indicators in our next article.


But before we discuss the fundamentals of forex fundamental analysis today, let’s remember the basic laws and fundamentals of economics, namely the laws of supply and demand.In our discussion, supply and demand determine the exchange rate..  The easiest way to follow these two waves is news.


With forex fundamental analysis, you will be in a strange world: Your main focus is on general economic and political conditions, including cultural events..  Have you noticed how President Trump’s tweets have rocked the markets?  If yes, then congratulations, it means that you have seen the fundamental analysis part in Forex.

Can you explain in more detail the relationship between news and forex fundamental analysis?


of course.  Let’s look at some events to understand the fundamental analysis of forex and the actual performance of the news.


Take the example of Trump’s Twitter.  The president wrote that the US would withdraw from NATO if Turkey continued to buy defense equipment from Russia.  This tweet caused the Turkish lira to fall.



Here’s another example that could have a big impact on the market right now.  The FOMC meeting recently decided to reduce the interest rate by 25 bp from the previous level.  This caused the US dollar to weaken, not by much, but felt very important to the market.




In the year  In August 2018, Brazil’s real estate collapsed – the reason being former president Luiz Inacio Lula da Silva.  At that time, he was found guilty of corruption, but surprisingly, he received huge profits from public assistance.  Investors were disappointed and pulled back most of their investments, causing the national currency to depreciate.




As you can see, every news can have a great impact on the market and as a result the market can change its direction. It is very important to follow all the economic and political news so that you are always ready to act immediately when the market adapts to new conditions.  The point you need to understand here is to recognize the conversion potential in the current opportunity – and that’s what successful trading is all about!

What else should you know about forex fundamental analysis?


This is the “framework” of fundamental analysis in forex, the most basic point.  To make your own forecast, of course, you have to take into account various basic conditions and economic indicators, major and minor.  But we’ll cover that later.


Fundamental analysis in forex works best when combined with technical analysis, but it is still good when used alone.  Stay with Finex and discover the secrets of fundamental and technical analysis in the forex market!


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