Forex traders rely on fundamental and technical analysis the same way futures and equity traders do. The use of technical analysis in forex is much the same: price is assumed to reflect the fundamentals. But unlike companies, countries can print money. Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation's currency. Here we look at some of the major fundamental factors that play a role in a currency's movement. "Currencies move for numerous reasons, ranging from central bank actions to weather disasters," says Nadia Simmons, forex and oil trading strategist at SunshineProfits.com. "It is important to remember, though, that exchange rates are always expressed in pairs, so you are always measuring pros and cons of two currencies."
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