Fundamental analysis is the analysis that is done based on the economic structure, social structure, or political structure of a country.
What is Fundamental analysis?
In fundamental analysis, you need to see which country’s economic structure is doing well and which country’s economy is going bad. How and why various events, including the rise in unemployment, play a role in the country’s economy, all these issues you need to give the most important in fundamental analysis.
Meaning of Forex Fundamental Analysis
If the current or future economic structure of a country is good, then the currency of that country will be strong. The better the structure of a country’s economy, the more foreign investors will be interested in investing in that country. So they have to buy any currency of that country and the value of that country’s currency will increase further. If America’s economic situation were better, more foreign investors would be interested in investing in this country and expanding their business. As a result, the value of the US dollar won out a lot. The same is true of other currencies.
One thing is Fundamental aAnalysis Remember:
- The better the economic condition of the country = the higher the value of the currency.
- The worse the economic condition of the country = the lower the value of the currency.
Let’s say the UK. S. The dollar is getting stronger because the structure of the US economy is doing better than before. It may be necessary to raise interest rates to control inflation.
High-interest rates make dollar-dependent economic assets attractive. If anyone wants to buy and invest in those assets, they must first buy dollars. As a result, the value of the dollar will increase and this is part of the fundamental analysis.
Later, other articles on Forex Fundamental Analysis will discuss different news, their effects, and how to understand and trade them.