As the Irish debt crisis drags the European currency lower we may well ask how to invest in Euro. One is reminded of the famous saying that the time to invest is “when there is blood in the streets.” Although the seemingly interminable bloodshed has ceased on the Emerald Isle there is a financial version of bloodshed with the nation’s recently downgraded national debt. Fitch, the debt rating service, reduced Ireland’s national debt to BBB+ and the Euro fell in value again in response to traders’ concern about another bailout similar to that floated for Greece. For the trader or investor who heeds to time honored advice of buying when times look worst we look at how to invest in Euro before the currency bottoms out and heads back up. Watching for Forex double bottoms is a useful way to spot a turnaround in the exchange rate but how to invest in Euro may go beyond short term trading.
The PIIGS and Forex crisis has been going on ever since word surfaced about debt problems in Portugal, Ireland, Italy, Greece, and Spain (thus PIIGS). The Euro has been driven lower and the situation has provided traders with the opportunity for profits as the EUR/USD pair and other have fluctuated. The silver lining around the black cloud of European debt is that a weaker Euro makes it easier and more profitable for companies manufacturing in the European to export their goods. The Euro debt crisis has created a situation for which the Japanese, Chinese, Taiwanese, and other have had to pay. It has weakened the home currency of export driven economies. No matter how a nation comes to a weaker currency there are those in the economy who will prosper. An example might be Siemens, the “General Electric” of Germany. How to invest in Euro might be by buying cheap Euros with more expensive Yen, Dollars, or Swiss francs and then investing in a company like Siemens who may stand to profit from the fall in the Euro. When the Euro starts to rise an investor could then sell his Euro for a second profit. This would essentially be a variation on the Yen carry trade in which an investor moves from currency to currency to take advantage of where profits are.
Asking the question how to invest in Euro implies a long term commitment. That is not necessarily the case. As with all currency trading the trader will move in and out of currencies as profit calls and loss threatens. How to trade Forex with the Euro, as with all currencies, is to keep in touch with the news relating to the currency and carefully watch market technical factors for price opportunities. How to invest in Euro may simply be to commit a set amount to trading the currency versus other majors and profit from market fluctuations along the way. The Irish debt crisis, and others, will not be solved soon. Thus the trader can expect to see his “Euro trading investment” be a source of income for the foreseeable future. We are not suggesting that the trader buy or sell or even trade Euro. The point of the discussion is to consider how to find and exploit opportunities in the Forex markets.
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