CHAPTER 6 Fundamental Analysis

Fundamental analysis looks at various types of topics, such as rates of inflation, interest rates, and rates of economic growth, and ranks countries based on these “fundamental” rates. The astute forex trader will seek to understand the context, or big picture, that is driving currencies up or down. Fundamental analysis tells us the overall direction of a currency based on many factors, while technical analysis tells us when is the best time to buy or sell a particular currency. The two work hand in hand.

There is a great deal to be said about fundamental analysis, so I’ve compiled the key factors that I think are most important to help the reader get a handle on this type of analysis.

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