"Buy at bottom, sell at top..." The games which Big Boys always play, most of them will use media to attract victims before start the big moves. (If you follow the news pop up from TV, and buy/sell...chances for you to make money is very little.)
Back to fundamental, USD Index is rebound, all kind of news is giving an impression USD is coming back. Some predict it is just a short term consolidation and USD still remain weak.
Market is all about participants perception, no doubt economic of each country is the most important element that determine the perception. Interest Rate, GDP, Consumer confidence, Trade deficit, Employment Rate...you name it.... All this will create perception for the fundamentalist to make their move in FX market. The so-called self-reinforcing process will create trend up, down, up again...down again and the pattern will continue. It range from 1 minute to more than 1 decade long if you look at the chart.
Back to the topic again, US economic no doubt is improving even a lot of noise to distract novice investors. Most of the indicators are showing sign of recovery. Is the recovery bring back the strong dollar? You will be surprised to see stock market is going up, USD is heading south. Why? the so called "risk aversion" and "risk appetite" explain it all.
Ok, I don't like fundamental a lot but start looking at it since the account is getting bigger and long term trading is in my mind. Fun-d-mental=Making your mental think funny..
I take a pair for your review. I like this pair a lot since it is easy to understand; USD/JPY. Let look at Japan , it is an export based economy. What is the implication of stronger yen to Japan economy? Bad..very bad. The strong yen will make the export more expensive. It will destroyed the corporate earning if yen become stronger and this will affect the overall economy. Furthermore, BOJ maintain almost 0% interest rate. Does this encourage the carry trade? Yes, but the other way round. Big Boys will borrow yen and invest in high yield currency such as Aussie. This explains why the AUD went up for the last 6-9 months. Okay, I guess this simple explanation will give you a clue when to buy or sell yen. Of course there are other elements invovled.
In the end of the day, if you are a long term speculator in FX, fundamental is a very important element for you to understand beside TA.
