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What is the “Spot Exchange Rate”? It is the price of one currency expressed in the price of another currency at any given moment in time – for immediate delivery. For example, how many Japanese Yen can be purchase for one U.S. dollar at this specific moment in time? The answer is relative to the exchange in the foreign exchange market.

The foreign exchange market is the largest market in the world with current estimates approximating the daily volume at $3 trillion. Currencies are traded around the clock throughout the world. The spot rate is the price of a currency purchased for immediately delivery (settlement occurs in not more than two business days). Most buying and selling occurs in the interbank market, and the minimum transaction size is one million units of a specific currency.  

Currency valuation based on technical analysis often stems from chart or trend data. Technical analysis requires the tedious recording of past price and volume.  Unlike fundamental analysis, technical analysis does not take macroeconomic factors such as political risk or inflation, into consideration.  The utility of technical analysis depends upon the analyst's ability to identify price patterns in the market.