Fundamental Analysis

Forex traders who utilize Fundamental analysis often keep one eye focused on the market and the other on a television set tuned to CNN. They will study the news for information on political climate, international relations, natural disasters and other worldly events in order to determine what might be coming up in the trading arena.
Fundamental factors that many traders use when deciding whether to stay with a trade or sell, besides those already mentioned, include unemployment rates, inflation, fiscal policy changes, and stocks/bonds/money markets. If an Earthquake occurs in India, for example, fundamental analysts will keep a close eye on the impending changes in the value of Indian currency to determine when to buy or sell.
Fundamental analysis studies the causes of market movements. This distinguishes it from technical analysis, which focuses on the effects brought about from those changes. Traders can often use fundamental analysis as a back-up system to confirm whether the market would support a trade that was recommended through technical analysis