What is fundamental analysis?

The study of an economy or business and how they affect the price of a certain asset is called Fundamental analysis. Fundamental analysis, similar to technical analysis, also tries to predict the futures price and trend of a certain asset based on market news, economic data and government policies.

Fundamental analysis is based on such a broad spectrum of events and data that can easily take the market by storm by creating rapid price changes.

The Most Powerful Economic Fundamentals

Interest Rates:

As the interest rates in a country rise, the currency of that country strengthens and vice versa.


Strong employment is a sign of a strong economy, while weak employment shows an economy that is struggling, which affects the currency of the country positively or negatively.

Trade Balance

A large negative trade balance can also cause a weak currency as commercial interests are forced to continually sell large amounts of the country’s currency.

Why utilize Fundamental Analysis in your trading strategy?

Fundamental analysis is very useful in determining overall trends. A single unemployment report is insufficient to determine the price trend of a particular asset. Several fundamental data points are needed to determine a general trend and technical tools are then used to determine exact entry and exit points.