By: Barbara Zigah

In Asian trading, the common currency managed to inch higher and hold there above the 1-month low, but traders remain skeptical that any bounce is sustainable as uncertainty over the Italian government’s ability to enact necessary reforms prevails. The Euro rebounded slightly from the sell-off which occurred after Italian bond yields hit the unsustainable 7% level, but yesterday’s bond sale yielded better results, offering traders some encouragement and relief. As reported at 12:31 p.m. (JST) in Tokyo, the Euro was trading against the U.S. Dollar at $1.3628, a 0.1% gain off of late New York trading; thus far in the trading week, the common currency lost some 1.4% of its value.

It appears that some efforts have been made to fill in the power vacuum of the Italian and Greek governments, with Mario Monti, a former E.U. Commissioner a front-runner to replace Silvio Berlusconi, and Lucas Papdemos, a former ECB official, was appointed to replace George Papandreous. Markets are wary of whether or not the political developments are sufficient to prevent another rise in bond yields, however, though they may temporarily buoy the common currency. Some analysts anticipate that the Euro is likely to drop by year’s end to $1.33.