The euro was recently adopted as the official currency of Lithuania, a nation that relied upon a Communist structure with its own currency, the lita. This makes Lithuania the 19th country to adopt the euro, and it puts more pressure on Russia’s economy at the same time. They are not the first Baltic nation to do so–Estonia and Latvia have both joined the euro since 2011.
This will definitely be a good thing for the nation of Lithuania as they rebuild their economy with the strength of the European Central Bank behind them. However, what it means for the price of the euro in the near future is a bit harder to tell. Lithuania’s economic situation hasn’t been exactly rosy in its prospects, and now that this burden has been added to the euro’s current struggles, it is likely that the euro might face some problems for a bit. Other countries using the euro have contributed to struggles over the last few years, namely Greece and Italy. Right now, the euro is barely up above its 52 week low, and as other currencies–namely the U.S. dollar–keep getting stronger, it is becoming harder and harder for the euro to gain traction.
In all likelihood, the euro won’t see much of a change because of this event directly. Lithuania is a small country of 3 million without a lot of wealth. They have been a member of the EU for quite some time, and it is expected that they would adopt the euro as their currency once they met certain economic criteria. There are many other countries that will eventually be adopting the euro, too. Romania is the next on the list, with a target date of 2019. Poland, Hungary, and the Czech Republic are members of the EU, yet still have their own national currencies that they are using. These are all things that will have to be accounted for later, unless there is some major change within EU membership rules. All of these things are likely to throw a wrench in the cogs of the price of the euro.
Over the long term, the euro will be fine. It’s a strong currency and it’s not going anywhere. However, currency traders already know this and it doesn’t affect their actions right now. Short term changes are what a Forex trader looks for, whether it be in the traditional Forex market, or if they are trading the euro as part of a pair within the binary options market. Events like the adoption of a new currency don’t happen often, but this was hardly unexpected, and in the grand scheme of this, it’s not actually a major worldwide event outside of Lithuania.
There may be a short term impact upon currency prices, but if you are looking for a long term bounce because of this, it is likely that it won’t happen. Instead, the trick is to watch for strengths in other currencies and play them off of the euro so that you can find a more exaggerated change. For example, good news that boosts the British pound sterling and bad news for the euro, when they happen at the same time, will intensify price changes, making Forex trades more profitable, and binary options easier to predict when it comes to being correct with a call or put options. The easier a trade is to predict, and the more momentum there si between the related assets, the more profits you will make long term. Looking for even small events like the euro adoption in Lithuania can be extremely valuable to you when you think about the other side of the pair you are trading, too.