Fundamental analysis is a strategy to forecast the intrinsic value of an investment. Fundamental analysis takes its roots from the hypothesis that the market price of an asset has a tendency to move towards its “real value” or “intrinsic value”.
Fundamental analysis in Forex predicts the price value of a currency and its market trend through analysis of Government policy, economic forces, and social factors within. Forex Traders estimate country’s economic situation by examining macroeconomic indicators such as:
Gross Domestic Product (GDP)
Consumer Price Index (Inflation) and Spending Index
Retail Trade and Consumer Confidence
Government Fiscal and Monetary Policy
Balance of Trade Surplus or Deficit