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Its Role in Forex
While fundamental analysis is somewhat limited in the Forex market, it is crucial for understanding currency pair movements. Economic dynamics that affect the value of national currencies can be key to success.
FA
Fundamental Analysis
A method that links economic and political developments to price movements.
What is Fundamental Analysis?
It is the field that examines the economic, political, and geopolitical dynamics behind price movements. International relations, monetary policies, central bank decisions, and global events lie at the heart of fundamental analysis. Investors interpret these developments in relation to prices to try and resolve uncertainties.
What to Follow
The economic calendar, macro data, central bank decisions, and political developments guide Forex investors.
Economic Calendar
It is the most commonly used tool in fundamental analysis. When key data is released, high-volume trading and rapid price movements may occur. While this may create risks, it also presents investment opportunities.
Interest Rates
Central bank interest rate decisions directly affect currency values. Higher interest rates may increase demand for the currency, while lower rates may reduce it.
Frequently Asked Questions
What type of investor is suitable for fundamental analysis?
It is suitable for investors who enjoy following macroeconomic developments and have a long-term perspective.
Why is the economic calendar important?
Because the release of key data can cause sudden price changes; investors who are prepared may gain an advantage.
How do interest rate decisions affect investors?
An interest rate hike increases interest in the currency, while a rate cut may accelerate capital outflows. This creates opportunities in exchange rate movements.
Source: Education Center
Updated: 01.01.2025
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