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Lesson 6 of 8
Fundamental Analysis
Forex Fundamentals
Currency values are driven by economic factors that differ between countries. Understanding these helps predict long-term trends.
Key Economic Indicators
| Indicator | Impact | Frequency |
|---|---|---|
| Interest Rates | High impact - drives currency flows | Central bank meetings |
| GDP | High impact - economic health | Quarterly |
| NFP (US Jobs) | Very high - major market mover | Monthly (first Friday) |
| CPI (Inflation) | High impact - affects rate decisions | Monthly |
| PMI | Medium impact - economic outlook | Monthly |
Interest Rate Differentials
Money flows to higher-yielding currencies. If US raises rates while EU holds, USD tends to strengthen against EUR.
Economic Calendar
Always check the economic calendar before trading. High-impact events can cause significant volatility and unpredictable moves.
⚠️ News Trading Caution
Major news events cause spread widening, slippage, and wild price swings. Consider reducing exposure or closing positions before high-impact releases.
Central Banks
- Federal Reserve (Fed): Controls USD
- ECB: Controls EUR
- Bank of England: Controls GBP
- Bank of Japan: Controls JPY
📋 Key Takeaways
- Review this lesson's material before moving on
- Practice the concepts on a demo account
- Take notes on what you've learned