Fundamental analysis is basically a way of evaluating the market by analyzing political, social and economic factors that might be affecting the demand and supply of any asset. If you look at it closely, it makes a lot of sense. It's just like the same approach you used to follow in your Economics 101 class, the only difference is that demand and supply has been replaced by the currency exchange rate.
By using demand and supply as factors of where the prices could reach is easy. The main thing is all about analyzing the factors that could be affecting demand and supply.
You might have to take a look at the several factors in order to find out whose economy is flourishing just like Taylor Swift's song, and whose economy is just-fair. It is important for you to understand how and why some factors for instance, the unemployment rate affecting our nation's economy and other monetary policies that finally affect the demand level for the currency.
The main factor behind this analysis is that if we find a nation's current or future economy good, then their currency must be strengthen. The investors and businesses are only willing to invest in a nation whose economic conditions are better. It may lead to the demand of purchasing that nation's currency in order to get those assets.
For instance, suppose the U.S dollar is strengthening simply because the economy is improving. As the economy gets better, these interest rates could be required to control inflation and growth.
Higher rates of interest lead to dollar-denominated financial assets more and more attractive. If you need to gain access to these assets, you might have to purchase some greenbacks. In this way the true value of the dollar may be increased.
You will also learn later in this course all the economic data points that are the driving forces behind the prices. You will also learn more about Fed Chairman and how economy is reflected by retail sales data. For now, it is important to know that fundamental analysis is all about analyzing the moves of any currency by figuring out the weaknesses and strengths of nation's economic outlook. You're going to love it, for sure!