Fundamental analysis

Fundamental analysis applied to forex focuses on the overall state of the economy, interest rates, production, earnings etc. 

It sounds scientific and intelligent but... for a Joe Public trader the direct causality remains blurry even if he understands the simple mechanism of the economy. 

Even if you know for instance that a decrease of interest rate devaluate the currency as it makes the investment in that currency due to small interest rate less attractive, that will not help you very much. You will for example still not know if this expected interest rate decrease - that is going to be anounced soon by a national bank - has been already taken account of by the market. In this case that would result most probably in no great price change.  

So in case you cannot come up with a solid forecast by yourself, you will be tempted to listen to the opinion of an expert. But even that does not solve the problem. We have a forex forecast that suggests a causality of an event, e.g.: "Greek debt talks are going to break down" - this will, referred to the opinion of experts, result in a decrease of the EUR. But then the debt in deed talks break down, nontheles nothing happens, unfortunately: EURUSD stagnates. You ask yourself: why is that? The retrospective explanation for the stagnation despite the fruitless debt talks will sound plausible - especially retrospectively. So you learn that the opposite outcome (EUR stagnates) was possible as well, and it occurred.
What I try to explain is, that fundamental analysis can't always show you the future direction of the currency, but nevertheless it can be useful. Take the catastrophy in Fukushima. I claim that Fukushima could have two diferent outcomes for Japanese Yen (although the outcome we had is completely plausible), but then it happened that Yen revaluated. The catastrophy had a huge impact on the forex market and the trend lasted few days. Therefore it was not necessary to predict in the first minutes of Fukushima what this event will do in the forex market, but just observe what is going to happen in the first hours and act appropriately - according to the trend.
I would like to point out, that I do not wait for catastrophies to earn money on them and I am sorry that they happend, but I bear in mind that when they happen, they rock the market.