Published by Mark Smith HalvorsenMoody's has warned that many European countries will need to make "brutal budgetary adjustments" if they are to avoid accruing unmanageable debts.Forex dealers have reacted to the statement with caution and trading in the euro-dollar currency pair was flat during the Asian trading session this morning (March 31st).The Moody's report focused in particular on Italy, which currently has an AA2 rating with a stable growth outlook. The group warned that forecasts of anaemic growth in the country may hamper its ability to cut its deficit.Elsewhere, Ireland's finance minister Brian Lenihan has issued a similarly stern warning as the National Asset Management Agency steps in with a toxic asset package to increase liquidity among Irish banks."Our worst fears have been surpassed. Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come," he declared when unveiling the package in the Dail last night.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site