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Fundamental Analysis 101

06 – Using the Dollar Index

Another useful tool in fundamental analysis is using the U.S. dollar index or USDX for short. This keeps track of the dollar's performance against a basket of currencies. Included in this basket of currencies are the euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc. Aside from providing a...

05 – Taking Advantage of Carry Trade

With interest rates dictating the rate of return for holding assets denominated in the local currency, forex traders also pay special attention to interest rate differences when it comes to keeping their positions open for a long time. This is because the interest rate difference is carried on when...

04 – Understanding Market Sentiment

Briefly introduced in the earlier sections is the concept of market sentiment, which involves gauging whether traders are in the mood to take on more risk in their portfolios or not. This is relevant in the forex market because higher-yielding currencies or those with central banks offering higher interest...

03 – Correlations in Other Financial Markets

Aside from watching economic data releases or keeping track of central bank policy biases, monitoring other financial markets can also be helpful in predicting forex price moves. To be specific, there are currencies that move in tandem with asset prices or precious metals while others are negatively correlated to...

02 – Economic Releases You Can Trade

The forex economic calendar is one of the most useful tools for traders, especially those who incorporate fundamental analysis in determining their currency biases. A typical forex calendar lists the upcoming data releases and indicates whether those could have a strong or low impact on the currency involved. These...

01 – Monetary Policy and Central Banks

Monetary policy and interest rate expectations play a central role in fundamental analysis, as these determine the rate of return for holding a country's assets and therefore the demand for its currency. As mentioned in the previous section, central banks' decisions carry a major influence in this regard. Of course...

00 – A Beginner’s Guide to Fundamental Analysis

What is Fundamental Analysis? Fundamental analysis mostly refers to the use of economic data to predict forex price movements. While technical analysis focuses on historical price action and repeating behavior, fundamental analysis takes into consideration the demand and supply for a currency based on the current and expected return in...