Fundamental analysis
a.k.a. Fundamentals, FA
Judging where a price might go by studying the economy, interest rates, news and politics behind it.
Fundamental analysis asks why a currency should be worth more or less. Traders watch interest rates, inflation, jobs reports, growth figures, trade balances and the mood of each central bank.
A country with a strengthening economy and rising rates tends to have a sturdier currency over time. Fundamentals explain the big picture; technical analysis helps with the timing. Most traders mix the two.
Expecting markets to react "logically" to a headline. Prices move on surprises relative to expectations, not on the news itself.
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