Forex - EUR/USD falls as Portugal seen roiling euro

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.