World offer and the demand for a particular currency, and therefore its value is affected by each element, but with some. These elements are generally divided into three categories:
# Economic factors.
Economic policy, include the propagation of government agencies and central banks, economic conditions, generally revealed by economic reports and other economic indicators.
Economic policy comprises government fiscal policy ( practical budget expenditures) and monetary policy (which means that the Central Bank, which affect the delivery of Government and the "cost" of money, which results in the level of interest rates).
# Political conditions
Events and internal political conditions, regional and international levels can have a profound effect on the foreign exchange market.
For example, the nation's economy may interfere with instability and political unrest. The emergence of a group that can be financially responsible to have the opposite effect. In addition, events in a country in the region to affect cylindrical gear interest positive or negative, in neighbouring countries and in the process can its currency.
# Psychology
Influence perceptions of psychology and trader market on the market of the Exchange in several ways:
1. Flights to quality: disrupt international events can in a "flight to quality" with investors leading the "Safe". There is a demand, so that more high prices for the currency, in addition to their colleagues as is were relatively weak.
2. Long term trends: currency markets to travel is often in the long term trend is visible. Although currencies do no annual season as physics, felt economic cycle. Analysis of cycle is that can increase trends in long-term prices for economic or political trends.
3. "The rumour buy, sell the fact": this market truism can be applied to many currency situations. It is a trend for the price which is the currency, the effects of certain measures reflect before that happens and respond, from the event, in the opposite direction. "" This can also be designated as the oversold market "or" has been overbought"." To buy or sell the fact of rumors, you also have an example of cognitive bias as anchor point, when the focus of investors will be called too on the relevance of the events of the exchange rates.
4. The economic numbers: while the economic figures may certainly reflect economic policy, some report number takes the talisman-like effect number itself is important, the market psychology and may have a direct impact on the short-term market movements. "What you see" may be amended from time to time. Recent years, as the money supply, employment, trade figures took turns spotlight in balance and inflation figures.
5. Trade technical considerations: as in other markets movements cumulative currency pairs like the EUR/USD pattern, recognized and may be to traders, in and out of the market open up can be usedleading to short-term price fluctuations. Many vendors of studying price charts to identify these patterns
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