The euro is up against an interesting challenge right now. Recent elections in Greece have put into power the anti-austerity party, and they seem to be very much against reliance upon the EU as a whole. This is fine, except for the fact that they currently owe the IMF 9.0 billion euros in back debt for this year, including 2.3 billion over the course of the next two months.
The excessive debt of the Greek nation has been a thorn in the side of the European Union for several years now, but the problem keeps escalating in severity. The EU and the IMF have offered Greece another loan to help delay the problem so that the Grecian economy can buy more time to strengthen itself, but this has been turned down. Experts say that Greek reserved do not have enough capital to make it through February, thus making the situation all the more dangerous. Now, add to this the fact that private banks also have about 15 billion euros worth of debt that needs to be repaid in the near future and you can see just why there is so much worry here.
The government, led by Prime Minister Alexis Tsipras, has said that they want to meet with creditors one on one to discuss payments. For many, this is another cause for alarm, but as of right now, it is not indicative of nonpayment or default. If you are trading the euro, this is definitely something to pay attention to–along with how the general public reacts to it–but it is not hard evidence of default at this point. It’s certainly strange, but many things that the anti-austerity party has been doing in its week of power have been against tradition.
A short term approach to the euro needs to take these things into account, especially as more details of how Greece will be handling this situation. A good approach involving binary options needs to take timeframes more seriously than usual. First, be aware that this is a situation that could change hour by hour over the next few weeks as more news comes out. Looking at timeframes that are shorter than an hour in length for most euro pairs will be smartest so that you can make adjustments as you go. 15 minute trades and shorter will be higher risk if you go with a normal approach, but because the situation here is still developing, this is actually much safer. A few bad trades in a row can be a sign that you need to back off and let the situation develop more information before you continue to act. It will prevent you from being locked into a trade, and keep things moving forward for you as quickly as possible, all while creating a profit to help cushion you from a potential loss.
Greece has already asked for more time to repay, and if their creditors agree, the situation still has potential to be resolved without a major financial catastrophe. They will be trying to fix the situation internally by closing tax loopholes that profit the wealthy, raising minimum wages, and attempting to be stricter on smuggling and other forms of corruption. There is definitely room for improvement, and if enough help is given to the economy, there is a chance that these things could work. However, it appears that the road to a full recovery is going to be quite long and painful as Greece rebuilds its economy and job structure. There is still a chance that the anti-austerity government will accept outside help, but for now, this is the path that they have chosen.