{"id":9514,"date":"2022-10-12T07:10:39","date_gmt":"2022-10-12T07:10:39","guid":{"rendered":"https:\/\/mdr.foobrdigital.com\/?p=9514"},"modified":"2022-10-12T07:10:39","modified_gmt":"2022-10-12T07:10:39","slug":"what-is-fundamental-analysis-2","status":"publish","type":"post","link":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/2022\/10\/12\/what-is-fundamental-analysis-2\/","title":{"rendered":"What is Fundamental Analysis?"},"content":{"rendered":"\n

Whereas technical analysis involves poring over charts to identify patterns or trends,\u00a0fundamental analysis\u00a0involves poring over economic data reports and news headlines. (And even random tweets from a certain world leader before he was banned.)<\/p>\n\n\n\n

Fundamental analysis is a way of looking at the forex market by analyzing economic, social, and political forces that may affect currency prices.<\/strong><\/p>\n\n\n\n

If you think about it, this makes a whole lot of sense! Just like in your Economics 101 class, it is supply and demand that determines price<\/strong>, or in our case, the currency exchange rate<\/strong>.<\/p>\n\n\n\n

Using supply and demand as an indicator of where price could be headed is easy. The hard part is analyzing all of the factors that affect supply and demand<\/strong>.<\/p>\n\n\n\n

In other words, you have to look at different factors to determine whose economy is rockin\u2019 like a BLACKPINK song, and whose economy sucks.<\/p>\n\n\n\n

You have to understand the reasons why and how certain events like an increase in the\u00a0unemployment rate\u00a0affect a country\u2019s economy and monetary policy which ultimately, affects the level of demand for its currency.<\/p>\n\n\n\n

The idea behind this type of analysis is that if a country\u2019s current or future economic outlook is good, its currency should strengthen.<\/p>\n\n\n\n

The better shape a country\u2019s economy is, the more foreign businesses and investors will invest in that country. This results in the need to purchase that country\u2019s currency to obtain those assets.<\/p>\n\n\n\n

In a nutshell, this is what fundamental analysis<\/strong> is:<\/p>\n\n\n\n

\"Forex<\/a><\/figure>\n\n\n\n


For example, let\u2019s say that the U.S. dollar has been gaining strength because the U.S. economy is improving.<\/p>\n\n\n\n

As the economy gets better, raising interest rates may be needed to control growth and inflation.<\/p>\n\n\n\n

Higher interest rates<\/strong> make dollar-denominated financial assets more attractive.<\/p>\n\n\n\n

In order to get their hands on these lovely assets, traders and investors have to buy some U.S. dollars first. This increases demand<\/em> for the currency.<\/p>\n\n\n\n

As a result, the value of the U.S. dollar will likely increase against other currencies with lesser demand<\/strong>. Since currencies are always paired<\/strong>, their performance is determined relative to that of another currency.<\/p>\n\n\n\n

Later on in the course, you will learn which economic data points tend to drive currency prices, and why they do so.<\/p>\n\n\n\n

You will know who the Fed Chairman is and how retail sales data reflects the economy. You\u2019ll be spitting out global interest rates like song lyrics.<\/p>\n\n\n\n

To be able to use fundamental analysis, it is essential to understand how economic, financial, and political news will impact currency exchange rates.<\/p>\n\n\n\n

This requires a good understanding of macroeconomics and geopolitics<\/strong>.<\/p>\n\n\n\n

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\u2019s economic outlook<\/strong>. It\u2019s going to be awesome, we promise!<\/p>\n\n\n\n

\"Europe<\/figure>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Whereas technical analysis involves poring over charts to identify patterns or trends,\u00a0fundamental analysis\u00a0involves poring over economic data reports and news headlines. (And even random tweets from a certain world leader before he was banned.) Fundamental analysis is a way of looking at the forex market by analyzing economic, social, and political forces that may affect currency […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[817],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9514"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9514"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9514\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}