Monday saw the common currency of the European Union drop in value when compared with the U.S. dollar amid the sale of Italian government bonds on Monday as the nation's new prime minister takes office, according to MarketWatch.
The euro zone's third-biggest economic system now is under the purview of Mario Monti, who was selected over the weekend to fill the vacancy created by the departure of Silvio Berlusconi. Monti finds himself if a situation similar to that of Lucas Papademos, the newly tapped prime minister of Greece. Both nations are enduring damages caused by the sovereign debt crisis.
"While the U.S. economic data has improved, the Greek and Italian political developments have reduced a lot of the tail risk in the euro and suggest short positioning may consequently be reduced," according to a note penned by strategists with Lloyds Bank in London, cited by MarketWatch.
Reuters reports the market initially was supportive of the new administration in Italy but the reality of sharp cuts and economic reforms set in and imparted a caution for the region that has been savaged by the sovereign debt crisis.
Greece is waiting on its second tranche of international aid since June 2010 while Italy – trailing France, the region's second-largest economic power, and top regional economy Germany – is implementing measures as a consequence of the debt crisis' damages.