Fundamental analysis is a key component of successful forex trading, as it helps traders understand the underlying factors that drive currency prices. Unlike technical analysis, which focuses on historical price data and chart patterns, fundamental analysis examines economic indicators, geopolitical events, and market sentiment to evaluate the intrinsic value of a currency.

There are several economic indicators that traders pay close attention to when conducting fundamental analysis in forex trading. These indicators include interest rates, inflation rates, gross domestic product (GDP) growth, employment data, and consumer sentiment. By analyzing these indicators, traders can gain insight into the health of an economy and the potential direction of its currency.