Fundamental analysis focuses on financial and economic theories, as well as political developments to determine why, when and where prices will move in the market. One clear point of distinction between fundamental and technical analysis is that fundamental analysis studies the causes of market movements, while technical analysis studies the effects of market movements.

Fundamental analysis entails the examination of macroeconomic indicators, asset markets and political considerations when evaluating a nation's currency in terms of another. Macroeconomic indicators include figures such as growth rates; as measured by Gross Domestic Product, interest rates, inflation, unemployment, money supply, foreign exchange reserves and productivity. Asset markets comprise stocks, bonds and real estate. Political considerations impact the level of confidence in a nation's government, the climate of stability and level of certainty.