Fundamental Analysis

A currency is used as the basis of trade for general goods and services within an economy. Usually, each country has its own currency, and exchange with the legal tender is only valid in the respective country. However, there are groups of nations that band together and use a single currency between the members (e.g. the Euro-zone).

Currency value is most broadly based on supply and demand, although some developing countries peg the value to a more stable country's currency or to a basket of currencies/investment vehicles

For a currency trader, fundamental analysis focuses on key underlying economic and political factors to determine the direction of a currency's value. There are a number of fundamental indicators traders may follow that reflect how an economy is changing and gleam insight into Forex market prices to come.