Rate drops to new lows overnight as cross-liquidation continues but rallies back hard as official bids absorb offers under the 1.3350 area. Aggressive liquidation by EURO-Sterling cross spreaders providing the main selling but traders note lots of stops active under the 1.3400 area.

Late longs are under pressure and can't ignore a break of the 50% fib defense numbers. Bears took a stand at 1.4700 area last year and likely have reached technical levels around the 1.3300 area so expect some firmness in this area.

Traders note some stops within range overnight suggesting longs are late or nervous. Correction lower is likely to continue a bit further but that will likely be a buy point.

EUR/USD Daily
Resistance 3: 1.3740/50
Resistance 2: 1.3700
Resistance 1: 1.3660
Latest New York: 1.3526
Support 1: 1.3300
Support 2: 1.3250/60
Support 3: 1.3200

Data due Wednesday: All times EASTERN (-5 GMT)
2:00am EUR ECB President Trichet Speaks
3:55am EUR German Unemployment Change
5:00am EUR PPI m/m

Forex Analysis by Jason Alan Jankovsky at ForexPros.com. For more details about Forex Trading and Tips for decent earnings through Forex Trading, Please check http://www.forexpros.com