In Asian trading, the EUR/USD remains close to the low struck last week with investors concerns over what’s ahead for Spain putting pressure on the Euro, which fell to $1.2931, a decline of 0.3% and close to the $1.29195 low struck on Thursday. Last week, the EUR/USD pair hit a 4-month high of $1.3173 only to lose support and drop 1.8% by the week’s end, a signal to analysts that the rally spurred on by the Fed and ECB has lost steam with short positions now likely to be built from here on out.
In Spain, the government is expected to present the 2013 draft budget plan later this week, which will include proposed structural reforms and bank stress test results; many believe that this might then compel the government to officially ask for financial assistance from the Troika. The ECB has promised to buy Spanish sovereign debt, but cannot do so until the Spanish government makes an official request for aid. However, the Spanish economic minister had said that they refuse to be rushed into the decision, and policy watchers expect that that won’t come until after late next month. Also on Spain’s radar is a possible downgrade to junk status from Moody’s debt rating agency, but analysts believe that that might be the impetus for the government to seek bailout assistance.