What Is Fundamental Analysis in Forex? Key Economic News and Statements You Should Know
One of the key pieces of knowledge that helps us become more successful in our trades and better predict future market trends is fundamental analysis. Fundamental analysis refers to any analysis or review that is not based on charts but focuses on economic news and data. Learning fundamental analysis can improve our technical analysis performance, as these two methods complement each other, helping us become more professional traders.
In this article, we will focus on fundamental analysis by categorizing economic news and statements based on their importance and impact. We will also introduce which types of economic news and official statements, such as central bank announcements and key speeches, traders should pay attention to.
Core Aspects of Fundamental Analysis
1_Major economies and key countries around the world
2_Global economic events and news
3_Statements from major central banks worldwide
These topics form the foundation of fundamental analysis and play a crucial role in influencing Forex market prices, often causing significant fluctuations in currency values. Understanding these factors is essential for traders to make informed decisions and manage risks effectively.
Every day, we witness numerous events around the world such as severe storms, political speeches, protests in various countries, wars, floods, and other natural disasters. However, in fundamental analysis, we focus primarily on major economic news and key indexes that have a direct and measurable impact on the Forex market.
What news has an impact on the forex market?
1_Bank statements
2_Economic indicators
We focus only on news related to these topics because they allow us to analyze the market more effectively. These types of news directly impact currency values and often shape the market sentiment.
Major central banks around the world regularly issue statements. For example, they may announce changes in interest rates, discuss monetary policies such as printing money, or talk about lending programs. These announcements have a significant impact on the Forex market.
Since these banks are the main participants in the global financial system, their decisions often act as signals for traders worldwide. Economic indicators are also crucial for us, and they provide valuable insights into the health of various economies. They help traders anticipate possible future moves by central banks and adjust their strategies accordingly.
Important News and Economic Indicators for Traders
First, to track news and economic indicators, we use the Forex Factory website, which offers a comprehensive calendar of economic events. However, we focus only on news and key economic indicators that have a real impact on the market. On Forex Factory, high-impact news is highlighted in red, medium-impact news in orange, and low-impact news in yellow, as illustrated in the image below.
For us, the most important news are those marked in red, which we focus on primarily, while we also keep a close eye on orange news.
Photo by forex factory
As shown in the image above, the importance of each economic news item is indicated by color. For us, only news and economic indicators marked in red are highly important and prioritized. Additionally, statements from major banks such as the U.S. Federal Reserve and speeches by the heads of the world’s leading central banks are also crucial and deserve our attention. By mastering fundamental analysis, we can gain a clearer and more comprehensive understanding of the market.
We hope you found this article useful.