US Budget Deficit to Balloon to Record $1.6 Trillion in 2010

The White House will predict a $1.6 trillion U.S. budget deficit in the 2010 fiscal year, a fresh record and the biggest since World War Two as a share of the economy, a congressional source told Reuters on Sunday.

The grim forecast adds to the challenges facing President Barack Obama, who is emphasizing a message of fiscal discipline but is also seeking stimulus measures to boost the struggling economy in the near term.

Obama's budget proposal, which will be released at 10 a.m. EST on Monday, will predict a narrowing of the deficits to $700 billion by fiscal 2013 before they gradually rise back to $1 trillion by the end of the decade, the Capitol Hill source said.

He will submit his spending blueprint for the 2011 fiscal year that begins Oct. 1 and runs through Sept. 30 next year.

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Traderone:With such huge budget deficit can the USD continue to strengthen? If so, where is the fundamental that support the demand for USD? Or is the market so inefficient that investors are chasing less worthy assets? Will this be the catalyst that support Eurousd to rebound since it is already in oversold position?