Forex Fundamentals Cheat Sheet

Quick Reference Tables

Key Release	What It Measures	When
NFP	US employment (non-farm payrolls)	First Friday of month
CPI	Inflation	Monthly
GDP	Economic growth	Quarterly
FOMC	Fed rate decision & guidance	~8× per year

Currency Type	Examples	Notes
Major	EUR/USD, GBP/USD, USD/JPY	Tight spreads, high liquidity
Minor (Crosses)	EUR/GBP, EUR/JPY, AUD/JPY	No USD; wider spreads
Exotic	USD/TRY, USD/ZAR, USD/MXN	Wider spreads, higher volatility

Carry Trade	Borrow	Invest	Earn
Classic	JPY, CHF (low yield)	AUD, NZD, TRY (high yield)	Swap (interest differential)

Key Rules

• Check the economic calendar. Know high-impact releases before trading.
• Avoid or reduce size during news spikes. Slippage and widened spreads are common.
• Understand rate differentials. Higher rates tend to strengthen a currency.
• Don't fight the trend. If fundamentals support a currency, avoid fading it.
• Combine fundamentals with technicals. Fundamentals for direction; technicals for timing.

Key Economic Drivers

• Economic data – GDP, NFP, CPI show health. Strong data supports currency.
• Interest rates – Higher rates attract capital; lower rates weaken.
• Central bank policy – Fed, ECB, BoJ drive rates. Hawkish = bullish; dovish = bearish.
• News & geopolitics – Surprises cause volatility. Know consensus vs actual.

Interest Rates

• Main driver of currency strength. Higher rates = stronger currency (capital inflow).
• Interest rate differential between two currencies influences pair direction.
• Central banks set rates based on inflation and growth targets.

Central Banks

• Fed (US) – FOMC meetings ~8×/year. Drives USD.
• ECB (eurozone) – Drives EUR.
• BoJ (Japan) – Often dovish; JPY is funding currency.
• BoE (UK) – Drives GBP.
• Hawkish = rate-hike bias (bullish). Dovish = rate-cut bias (bearish).

News Trading

• Before release – Low volatility, tight ranges.
• At release – Spike, slippage, widened spreads.
• After release – Volatility often mean-reverts. Some wait 15–30 min.
• Surprises (actual vs consensus) drive the biggest moves. Mark high-impact events.

Carry Trade

• Borrow low-yield (JPY, CHF), invest high-yield (AUD, NZD, TRY). Earn swap.
• Swap – Overnight interest credited/debited daily by broker.
• Risks – Currency depreciation, rate changes, risk-off events (carry unwinds).
• Works best in calm, risk-on environments. Avoid when sentiment is negative.

Market Sentiment

• COT report – CFTC data on positioning. Extreme net long/short can precede reversals.
• Retail positioning – Broker data. Retail wrong at extremes; contrarians fade.
• Contrarian – Fade the crowd at extremes. Use with price action and fundamentals.