The cost and cost of a bond can also be affected by other factors, but Head Capital believes that it is not the yield itself that is of interest, but how it changes over a specific period of time, such as a one-year time dimension. Knowing this information, an advanced trader, after analyzing the difference in bond yields, can expect what actions the central bank will take and how these actions will affect the exchange rate of a particular currency pair, and adjust the ** strategy. As you can see from the chart, at present, investors' inflation expectations have been declining for a long time, which may be one of the factors that prompted the US Federal Reserve to lower interest rates at one of its upcoming meetings.
There are three main forex fundamentals that play an important role in the analysis of the fundamentals of foreign exchange rates. They are the Law of Interest Rate Parity, the Law of Purchasing Power Parity, and the Fisher Equation.
But Alpha Capital reminds traders that the main information is learned from the charts, that is, investors should not abandon technical analysis; And, even if an investor's assumptions seem convincing, the lack of information can put the investor's principal at high risk. It doesn't mean that fundamental analysis is useless. When you understand the principles of how the market works, you will have many advantages, especially when the fundamental trend changes. Nevertheless, if an investor trades in a trend of less than 4 hours, he should make a decision based on fundamental analysis, and he should also trade carefully and be responsible for his own principal.