1. What is Fundamental Analysis?

Fundamental analysis, or a fundamental view of currency markets, is widely misunderstood. It is not simply about the economic conditions facing a country. Fundamental analysis, when properly understood, contains sentiment analysis. Let us state this another way. Fundamental analysis deals with economic forecasts and expectations about economic metrics such as consumer price index, gross domestic product, employment, and so on. These fundamental expectations involve longer-and medium-term durations. The exact mix of expectation durations is always changing. Sometimes expectations of economic outcomes a year ahead can impact current price action. At other times, the immediate geopolitical and global economic conditions have an immediate impact.