The EUR/USD is selling off sharply on Monday, following the Pound and U. S. equities lower on the news Britain is nationalizing Lloyd's bank. Furthermore, HSBC experienced a rapid selloff, signaling the financials are in for another wave of turmoil on a global front.

This realization alone is foreboding that the major EU banks will experience similar troubles. With the ECB holding its benchmark at relatively high levels compared to the Fed and BOE, investors are speculating the ECB will need to lower rates closer to zero as well.

Encouragingly, the EUR/USD is catching itself above February and March lows, rescuing the currency from a traumatic selloff for the time being.

However, if the March lows are breached we could be in for a fire-sale towards 1.20. Fundamentally, we maintain our support of 1.2549 with fresh 2nd tier and bottom-end supports resting at 1.2571 and 1.2479, respectively. To the topside, find resistance at 1.2634 with 2nd tier and top-end hanging at 1.2677 and 1.2730, respectively. The EUR/USD is currently exchanging at 1.2565.

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