As this week comes to an end, markets rebounded to the upside, recovering some of the huge losses incurred during this week, where investors tend to close their short positions ahead of the coming week, yet slight optimism is seen in the market after the Italian house of deputies passed the austerity package.

Markets are correcting some of the huge losses incurred this week, where pessimism dominated the market sharply after the European Summit failed to ease jitters and quell rising debt woes, where the euro reached the lowest in 11 months and accordingly the U.S. dollar set the highest in 11 months supported by haven demand.

Major currencies gained some strength against the U.S. dollar today, especially when Italy is showing commitment and accelerated the application of the austerity, which supported the euro to gain some more strength, especially after the majority of the Italian Deputies voted in the favor of the austerity, backing the new technocratic government.

The euro gained strength against the U.S. dollar after the vote from the Italian lower house, where Italy attempts to restore confidence and ease market tension by providing markets with more measures which reflects the nation's commitment to the procedures needed to avert falling into deep crisis following Greece, Ireland and Portugal in seeking bailouts, where Italy is too big to bailout and it is the third largest economy in the euro-area region.

The Italian Lower House of Deputies approved the austerity package set by the technocratic new government, where Mario Monti, the new Italian Prime Minster provided an austerity plan worth 30 billion euros of cuts in order to bring down the current debt to GDP ratio of 120%, noting that Italy handles more that 2.2 trillion euros of debt.

The EUR/USD pair opened the session this week at $1.3378 and recorded a high of $1.3380 and a low of $1.2945 -the lowest in 11 months-. Over intraday basis, the pair started the session today at $1.3014 and recorded the highest at $1.3079 and the lowest at $1.3003, and is currently hovering around $1.3077.

Now the focus will be on the Italian yields which kept on rising in the past period reaching to records, where investors are weighing the risks behind Italy falling behind the rest of the euro zone and are expecting Italy to be the next victim of the debt crisis, especially when tension eased in Spain which ran two successful auctions this week.

The U.S. dollar index (USDIX) opened this week at 78.71 and recorded a high of 80.72 -the highest in 11 months- and a low of 78.69. Over daily basis, the index, which tracks the dollar's movement against other major currencies, opened in Asia today at 80.28 and recorded the highest at 80.32 and the lowest at 79.92. The dollar index is currently hovering around 79.99.