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. 

If you think of the markets as a big clock, fundamentals are the gears and springs that move the hands around the face. Anyone can tell you what time it is now, but the fundamentalist knows about the inner workings that move the clocks hands towards times (or prices) in the future. 

Are you a technician or fundamentalist? 
Theres a tendency to pigeonhole traders into two distinct schools: fundamental or technical. In fact, most smart traders favor a blended approach versus being a purist of either type. 
Fundamentalists need to keep an eye on signals derived from price charts, while few technicians can afford to completely ignore impending 
economic data, critical political decisions or pressing societal issues that influence price action. 

Forecasting economic conditions using models 
Fundamental analysis is very effective at forecasting economic conditions, but not necessarily exact market prices. Studying GDP forecasts or employment reports can give you a fairly clear picture of an economys health and the forces at work behind it. But you still need a method to translate that into specific trade entry and exit points. 
The bridge between fundamental data and a specific trading strategy usually comes from a trader model. These models use current and historical empirical data to estimate future prices and translate those into specific trades. 

Beware of "analysis paralysis" 
Forecasting models are both art and science, with so many different approaches that traders can get overloaded. It can be tough to decide when you know enough to pull the trigger on a trade with confidence. 

Many traders switch to technical analysis at this point to test their hunches and see when price patterns suggest an entry. 

Look for fundamental drivers first 
The fundamentals include everything that makes a country and its currency tick. From interest rates and central bank policy to natural disasters, 
the fundamentals are a dynamic mix of distinct plans, erratic behaviors 
and unforeseen events. 
That said, not every development will move a countrys currency. Try to start by identifying the most influential contributors to this mix versus following every fundamental out there.

Forex Market Drivers:

Rising interest rates strength that countrys currency 
A common way to think about interest rates is how much its going to cost to borrow money, whether for our mortgages or how much well earn on our bond and money market investments. Interest rate policy is a key driver of currency prices and typically a strategy for new currency traders. 

Fundamentally, if a country raises its interest rates, its currency prices will strengthen because the higher interest rates attract more foreign investors. 

For example, higher rates in the Eurozone may prompt U.S. investors to sell U.S. dollars and buy bonds in Euros. Similarly, if interest rates increase in Switzerland, those investors may decide to sell their Euro-bonds and move into bonds in Swiss francs (CHF), driving Euros down and Swiss francs up. 

When gold goes up, the USD often goes down (and vice versa)
Historically, gold is a "safe haven", a country-neutral investment and an alternative to the worlds other reserve currency, the U.S. dollar. That means gold prices tend to have an inverse relationship to the USD, offering several ways for currency traders to take advantage of that relationship. 

For example, if gold breaks an important price level, youd expect gold to move higher. With this in mind, you might sell dollars and buy Euros, for example, as a proxy for higher gold prices. 

Rising gold prices help major gold producers
Australia is the worlds third largest exporter of gold, and Canada is the third largest producer worldwide. These two major currencies tend to strengthen as gold prices rise. You might consider going long these currencies when gold is increasing in value, or trade your GBP or JPY for these currencies when gold is on the rise. 

Oil-dependent countries weaken as oil prices rise 
Just as airlines and other oil-dependent industries are hurt by rising oil prices, so are the currencies of oil-dependent countries like the U.S. or Japan, both of which are massively dependent on foreign oil. 
If you believe oil prices will continue to rise, you can consider buying commodity-based economies like Australia or Canada or selling oil-dependent currencies.