Fundamental Analysis
fundamental analysis involves studying the economy to determine the effect it has on the value of a currency. There are certain economic indicators that forex traders can observe in order to determine the strength of an economy and its currency value. Economic reports are released by governments and independent bodies that collect and analysis economic data. If an economy is determined to be strong, investors may seek investment opportunities in that country. In turn, the currency of that country may
appreciate in value. If an economic report is expected to be week, then forex traders tend to sell the currency ahead of the report, causing the price to fall. The financial markets react to the reports when they are released. The initial reaction after a news release of certain news reports can be very volatile and it is therefore best to stay out of the markets during a news release.
