Fundamental Analysis Basics
Fundamentals drive long-term currency trends. Understanding them gives you an edge.
Key Economic Indicators
Interest Rates
- Central bank policy rates
- Higher rates = stronger currency
- Watch Fed, ECB, BoJ, BoE decisions
Employment Data
- Non-Farm Payrolls (NFP) for USD
- Unemployment rate
- Jobs growth
Inflation
- CPI (Consumer Price Index)
- PPI (Producer Price Index)
- High inflation may lead to rate hikes
GDP
- Economic growth measure
- Strong GDP = strong currency
- Quarterly releases
Trading the News
Before Release
- Check consensus expectations
- Avoid holding positions through major news
- If holding, use wider stops
After Release
- Compare actual vs forecast
- Wait for initial volatility to settle
- Trade the trend that develops
Economic Calendar Must-Watch
- Central bank meetings
- Interest rate decisions
- NFP (first Friday monthly)
- CPI data
- Retail sales
- PMI data
Combining Fundamentals and Technicals
- Use fundamentals for direction
- Use technicals for timing
- Don't fight the fundamental trend
- Major levels + fundamentals = high-probability trades