Forex Market Analysis Tips

Trading Forex is a very sophisticated work. There are many newbie traders in Singapore and other places of the world that underestimate any kind of financial market 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 and knowledge can give you a chance to trade Forex successfully.

 We have already mentioned technical and fundamental analysis in our previous articles. Now we would like to extent this theme and give more light to this so important in Forex trading subject.

Though according to our previous articles the interest in technical analysis is growing and sometimes it replaces the fundamental analysis, especially in Asian markets like Singapore, Japan and Chine, it is still evident that technical analysis is not enough for a successful 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 and cannot be predicted by looking at the charts.

You can use financial calendar that is provided by every Forex broker 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 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 volatile and popular currency pair in Forex as Europe and USA have the biggest economical systems that influence 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). Direction of ECB policyis first of all 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 where 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 great indicator for the currency pair EUR/USD. It is also recommended to watch the cross-currencies that doesn’t include USD for a broader 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.

It is important to be constantly updated in the world political and economical events while trading in Forex market, as a small change in one of the country’s economy may cause the chain of movements in Forex market charts.

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