Itís no secret that the euro has been struggling lately. This has been magnified by the fact that the European Central Bank is eyeing a policy that will help with increasing the rate of inflation in order to keep the currency competitive with the rest of the world. The euro is at its lowest point since last September because there is speculation that these policies could be rolled out as early as next week.
This is great news for traders. When prices position themselves in preparation for an event, you should start paying close attention. Even if that event shouldnít trigger such a massive response, when so many big traders believe that it will make a difference, it almost always does. Itís a psychological response, but that doesnít make it any less real when prices start moving.
The root problem is that the economy within Europe is slowing down in its growth, and the euro is following it. The ECB is aiming for just about 2 percent growth, yet that number is more around 0.3 percent right now. Alarm bells are going off, and they are now preparing to fight it. Stricter monetary policies seems like overkill to many, but if it will prevent an economic problem in Europe, then it is something that should be done. Luckily, these things have happened before, and as traders, we know that they produce a certain response. Therefore, we can profit from them.
There hasnít been much real change yet, at least nothing that is lasting. Still, traders know that the euro is going to keep dropping for a while, so they are getting ready to unload their euros and move it somewhere else. The likely candidate is the U.S. dollar, but this is definitely not the only place where it could go. This trend will go on for a bit, at least for a few days after the official changes are put into place. Once that happens, the euro should theoretically become stronger, although how long this will take is quite unclear. It could be a few days, it could be well over a year. You just need to be careful and pay attention to the incoming data in order to help yourself avoid a loss and turn all market movements into profits. Staying aware of whatís going on is important, and in this instance, it looks like fundamental data and following the news are your two best choices for anticipating new trends.
Just remember, if people are not buying euros, they are buying something else. Traders like Jarratt Davis are probably looking to buy Euros. The S&P 500 just recently broke the 2,000 mark for the first time, although it didnít finish the day there. But, this index is considered to be a great indicator of the health of the United States economy, and since the euro is declining, it would only make sense that cash is moved overseas here. Again, thereís no telling how long this trend will last for, but if itís there, you can use it.
Binary options are easy to use in instances like this when youíre unsure of how long a trend will last. The euro is dropping in price, sure, but what will happen in a week? Given this thought, buying 30 minute put binary options for the EUR/USD pair is a great idea, while buying year long options would not be a good action at all. Binaries allow you to break things down to ultra short trades when youíre unsure of the long term future, which is a great method for making a lot of cash off of small and short lived movement.