Investing.com - The U.S. dollar is trading higher against the
euro during Monday's Asian session as new fears regarding the
financial stability of Portugal have crept into the marketplace.
In Asian trading Monday, EUR/USD is lower by 0.10% at 1.2992. The
pair was likely to find support at 1.2747, Thursday's low, and
resistance at 1.3039, Friday's high.
Traders are parting with ways the euro in favor of the dollar after
Portuguese Prime Minister Pedro Passos Coelho said the government
will have reduce spending. Last Friday, a court invalidated some of
Portugal's austerity measures that were implemented in 2011 as part
of a bailout package.
Last Friday, Portugal's Constitutional Court ruled against a 2013
budge that include EUR5 billion in tax hikes, leaving the country
short EUR1.4 billion in expected revenue. Portugal, the "P" in the
popular PIIGS acronym, was the third euro zone member after fellow
PIIGS members Greece and Ireland to receive bailout assistance.
Last month, Cyprus received a bailout of EUR10 billion.
Coelho unveiled cuts to health and education spending instead of
another tax increase in a speech that followed an emergency session
of his cabinet on Saturday. Last year, Portugal failed to meet
budget deficit reduction goals set forth by the European Union, the
International Monetary Fund and the European Central Bank.
Portugal's economy, like so many others in the euro zone,
contracted in 2012, but at a brutal clip of 3.2%. In a statement
released earlier today, the European Commission said, "Continued
and determined implementation of the programme ... is a
precondition for a decision on the lengthening of the maturities of
the financial assistance to Portugal, which would facilitate
Portugal's return to the financial markets and the attainment of
the programme's objectives.
Elsewhere, EUR/JPY is higher by 0.93% at 128.02 while EUR/AUD is up
0.10% at 1.2528. EUR/GBP is down 0.04% at 0.8472.
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