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)
Interest Rates
Employment Index
Consumer Price Index (Inflation) and Spending Index
Retail Trade and Consumer Confidence
Government Fiscal and Monetary Policy
Balance of Trade Surplus or Deficit