Fundamental Analysis
Also known as economic analysis, it focuses on studying
$ the economic and political variables that affect currency movements, assuming that the supply and demand for the currency is influenced by the strength or weakness of the economy. An increase in economic strength or a rise in economic activity leads to increased interest in the currency, meaning higher demand for it, which drives its prices up.
The opposite is true. In cases where economic data comes in negative, and signs of economic weakness or contraction or recession appear, or even in cases of political tensions in the country of the currency, all this weakens buyers' interest in it, increasing the supply relative to the demand, which drives its prices down.
Important Note: You should know that due to the pairs system in the currency market and trading two opposing currencies, the strength and weakness of a currency is relative, meaning you trade by buying the strong currency against a weak one, or you trade by selling the weak currency against the strong one