Main Aspects Of Forex Market Analysis

Online Forex Trading is a very complex work. There are many newbie traders that underestimate any tools, instruments and analysis and think that online trading is as simple as playing casino where you have chances 50/50. It is definitely not so! Forex trading is a very complicated system and only its total understanding, knowledge and experience can let you trade Forex successfully.

Though the interest in technical analysis is growing and sometimes it replaces the fundamental analysis, it is still obvious that technical analysis is not enough for a profitable trading in Forex market. The world economy is so dynamic and unpredictable so any news or events can have a big and sudden influence on the market and cannot be predicted by just looking at the graphs.

Financial calendar is a good instrument of the fundamental analysis .You can use it in order to be updated with all economical news and events and be ready to the changes in the market when something important happens in the world. The most influencing the market events usually happen in USA (USD) and Euro zone (Euro). That is the reason why 60% of global trading is done on EUR/USD currency pair. This is the most popular currency pair in Forex as Europe and USA have the biggest economical systems that influence all the world economy.

The monetary policy of Euro zone is regulated by ECB (European Central bank), while decisions are taken by Governing Council that consists of National and Central Bank and the Board (ECB president, vice-president and four other members). The goal of ECB’s policies first of all is the price stability. Their main aims are to increase the Consumer Price Index (make it not less than 2%) and to increase the money aggregate (where annual growth rate must be not less than 4.5%).

The Council meets every month, on Thursday of the second week when the interest rate is announced. During this meeting the members give the average review of euro zone economic development prospects and rates of interest that is the most important aspect to control liquidity.

The similar announcement of the interest rates in USA is also important for the fundamental analysis of USD. Interest rate of both USA and Europe is a good indicator for the currency pair EUR/USD. It is also recommended to watch the cross-currencies that don’t include USD for a better picture of a fundamental analysis. While trading with EUR/USD currency pair there is a good reason to analyze the cross-currencies such as EUR/JPY and EUR/CHF. The Swiss (CHF) economy, for example depends on Euro zone economy. That’s why the fall of EUR/CHF causes the fall in rate of EUR/USD.

There are many traders who focus on both technical and fundamental analysis while trading on Forex market. Though these analysis are very different by approach, they give the broader and detailed view of the market. It is important to be constantly updated in the world political and economical events while trading in Forex market, as any event in one of the country’s economy may cause the chain of movements in Forex market charts.