Fundamental analysis is necessary for forex trading because it helps you understand the real world events and economic conditions which are moving currencies.
Fundamental analysis, compared to technical analysis, helps you go deeper than just price charts and patterns into macroeconomic indicators, such as interest rates, inflation, gross domestic product (GDP), employment, and central banks, to name a few.
Fundamental economic indicators reflect the current state of the economy of a country, and UNLIKE technical analysis, fundamental analysis can anticipate strong currency movements. For example, a country raising interest rates will usually lead to a stronger currency value as investment flows into a country increase, and political unrest or weak economic underpinnings will often lead to a sharp decline in a currency value.

By keeping an eye on the economic calendars, the economic announcements of central banks, and global geopolitical developments, it puts the all the economic indicators in one context enabling traders to be more informed in their trading decisions, and provides traders with the opportunity to better anticipate economic shifts and trends long term vs. short term market noise, and to factor into their risk management, the meaning behind volatility, and to stay out of highly speculative traps. Knowing much about fundamental analysis in a constantly changing global economic system and market puts not only you ahead of retail traders but puts you in a better position for sustaining their trading success.