Let’s take more of a look at fundamental analysis.
For example, let’s say that the U.S. dollar has been gaining strength because the U.S. economy is improving.
As the economy gets better, raising interest rates may be needed to control growth and inflation.
Higher interest rates make dollar-denominated financial assets more attractive.
In order to get their hands on these lovely assets, traders and investors have to buy some U.S. dollars first. This increases demand for the currency.
As a result, the value of the U.S. dollar will probably increase against other currencies with lesser demand.
Since currencies are always paired, their performance is determined relative to that of another currency.
Later on in the course, you will learn which economic data points tend to drive currency prices, and why they do so.
You will know who the Fed Chairman is and how retail sales data reflects the economy.
You’ll be spitting out global interest rates like song lyrics.
To be able to use fundamental analysis, it is essential to understand how economic, financial, and political news will impact currency exchange rates.
This requires a good understanding of macroeconomics and geopolitics.
No need to be intimidated by such fancy-sounding words though.
For now, just know that fundamental analysis is a way of analyzing the potential moves of a currency through the strength or weakness of that country’s economic outlook.
It’s going to be awesome, we promise!
If you’d like to earn extra income trading on the Forex market, consider learning how to currency trade with Forex Smart Trade. With their super-accurate proprietary trading tools and best-in-the-business, personalized one-on-one training, you’ll be successful. Check out the Forex Smart Trade webinar. It shows one of their trader’s trading and how easy, intuitive, and accurate the tools are. Or try the Forex Smart Trade 14-day introductory trial for just TEN dollars.