Factors of fundamental analysis.

To apply fundamental analysis to forex, you need to understand which factors have the greatest impact on currency movements and how to properly consider them when planning new trades and closing existing ones.

Fundamental analysis factors include not only key economic and financial news but also other announcements that directly influence trends.

Therefore, you should be extremely careful when conducting the analysis.

Expectations and trends.

Experience shows that the anticipation of a new announcement often has as much of an impact on the market as the news itself. This is because there are numerous analytical agencies and analysts offering their predictions about the outcome of the news. For example, whether interest rates will rise or fall, or whether inflation and unemployment data will change.

This anticipation factor allows for more stable profits than the sudden surges that follow the news release, and if the prediction is confirmed, profits can increase several times over.

Main factors.

These include news about changes in the finances, economy, and politics of the country issuing the currency in question. External factors also include trust in the currency, its correlation with other currencies, and so on. This issue is covered in more detail in the article " Factors Affecting the Exchange Rate ."

The power of influence.

Unscheduled news has the strongest impact – reports of defaults, catastrophes and natural disasters, military coups, and other troubles. Positive news also contributes to exchange rate growth, but they occur much less frequently.

Psychologically, most traders know which news will have the greatest impact on exchange rates. For example, news of a Bank of Japan intervention is always eagerly awaited by those entering into short positions. Clearly, its release will immediately increase the supply of currency, leading to a downward trend. There are also other events that trigger a clear reaction from the exchange – changes in interest rates, announcement of election results, announcements of changes in monetary policy, changes in unemployment and inflation figures.

Recently, it has become quite difficult to 100% predict the market impact of any given news item, due to the influence of factors hidden from traders. Therefore, it is not advisable to rely solely on fundamental analysis when trading.

forex indicators installed in the trading terminal will allow you to verify incoming information and avoid mistakes when choosing a trade direction.