Factors: Fundamental Analysis
ForEx markets are always affected by a number of social, political and financial factors that really set up the global trade market scenario. The market needs of its stability in order to create an international steady exchange market where currencies value only fluctuates within controlled margins. However, the different global situations can easily strike at the foundations of ForEx and other international financial markets.
Global reserve currencies can be affected in both way, appreciation and devaluation, by national banks and governments; both institutions can work on the national currency by raising or lowering its rates in order to secure a particular currency value. Countries can also influence their own exchange currencies by interventions, setting up new values for their currencies to become stronger and better positioned. National currency reserves can take upon their own currency in order to avoid bilateral transactions and, therefore to trade autonomously.
Investors, brokers and participants make use of different methodologies to approach the foreign exchange currency rates fluctuations. One of these most important tactics is, without doubt, the technical analyses. Technical analyses provide us with one of the best methodologies but it is based on the price fluctuations. The market needs of more precise tools in order for the currency values to offer stability even under challenging international circumstances. The Fundamental Analysis emerges when currency rates fluctuations must be analyzed, a moment where Technical Analyses are not capable of reacting against these critical values moves. The fundamental analysis will refer to political, social events and economic as factors or analytics indicators.
The fundamental analysis provides us with the tools to play against these factors; analysts study the different political, social and economic events in order for the market to take avoiding actions. These crucial elements can really have a serious detrimental impact on the market if analysts do not catch sight of them promptly. Unlike technical analysts or technicians and their prices-based analysis, fundamental analysts prefer to develop strategies to establish a proper currency value as well as predictions on forthcoming values; both methods call for of each other’s cooperation as international circumstances have always an important impact on the price.