By: Barbara Zigah

The U.S. Dollar Index is holding steady, close to a 7-week peak as the common currency Euro remains on the defensive amid growing concerns that Spain’s fiscal troubles will exacerbate following election losses by the ruling party. As reported at 1:30 p.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 76.15 .DXY breaking through resistance at 76.00 .DXY, at one point the Index was as high as 76.32 .DXY; it remains well off the 52-week high of 88.71 .DXY.

Spain has the largest economy in the Eurozone, and the Spanish government has refused to accept external assistance in resolving the myriad problems of their economy. It was recently reported that Spain’s accounting system has essentially been hiding sovereign debt at the regional and local levels, so that the fiscal situation is actually worse than reported. Making matters worse, this past weekend, the ruling Socialists’ lost seats in regional elections. While some have heralded the Spanish government’s fiscal reform efforts, given the election outcome the government’s implementation of more austerity measures will be that much more difficult.