USD Trading Outlook (05-03-2013)

The euro (EUR) dropped below 1.3000, and is currently at 1.2995 versus the US dollar (USD) as European markets open. Investors are weary of political developments in Europe as Eurogroup members meet today. The Italian election and the hung parliament result means that Europe’s largest debtor country will be without government for some time. A new vote may be possible if a compromise is not found. In other news we expect Spanish unemployment to rise further in a country where unemployment has reached 26.6%. These developments may put further pressure on the euro as the European indebted periphery looks far from growth.