Fundamental Analysis

Fundamental analysis studies the core underlying elements that influence the economy of a particular entity, like a stock or currency. It attempts to predict price action and trends by analyzing economic indicators, government policy, societal and other factors within a business cycle framework.
In other words, if a particular country has a successful economy, its currency value will grow, if the economy is going through a rough time the currency value will fall.

Things that affect economy are called economic indicators. They are snippets of financial and economic data published regularly by governmental agencies and the private sector. These statistics help market observers monitor the economy's pulse - so it's no surprise that they're religiously followed by almost everyone in the financial markets. With so many people poised to react to the same information, economic indicators have tremendous potential to generate volume and to move prices. It might seem like you need an advanced economics degree to parse all this data accurately - but in fact traders need only keep a few simple guidelines in mind to making trading decisions based on this data.

Most important economic indicators are:

1. Gross Domestic Product (GDP)
2. Industrial Production
3. Purchasing Managers Index (PMI)
4. Producer Price Index (PPI)
5. Consumer Price Index (CPI)
6. Durable Goods
7. Employment Cost Index (ECI)
8. Retail Sales
9. Housing Starts

All of these things affect economy in some way and should be taken into consideration when making fundamental analysis if you want to maximize your profit and minimize your losses on trades.