The fundamental analysis of forex trading is based on the consideration of trends as they are caused by events, politics fundamental analysis for forex economics. Movements in a given currency are, to some extent, dependent on the geopolitical context of that country, the policies of its central bank, and the country’s economic context.
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A good, basic example is the policy of quantitative easing announced by the US Federal Reserve about two years ago. This policy, insofar as it affected only currency, involved maintaining a very low rate of interest on the US dollar. It also involved increasing the supply of US dollars. Obviously, whenever supply increases and interest rates decline, the value of a currency also declines at least to some extent. Fundamental traders would have undoubtedly strategized for a weaker dollar in their trading. Technical traders would have ignored the Fed’s policy, and just observed where the dollar hit a support floor in a given period. There are, however, points when even technical traders must look up from the charts.