Rate rallies back on cross-spreading but holds under previous highs; stops noted on the move higher suggesting shorts are late. Traders note stops and unwinding of Yen cross-spreads supporting the rate. Follow-on selling finds bids at prior low. Rate reaches fib retracement and resistance areas so a pullback may be over.

Large range suggests more volatility coming soon. Traders note liquidity is better than last week. Aggressive traders can buy anytime on weakness but expect more whippy action. Two-way action likely to continue. Confirmed sovereign interest on the dip as semi-officials seen on dips in both EURO and GBP recently; lately middle-east names. Traders report cross-spreading for Sterling/JPY lifting the rate.

Rate two-way in solid action; bids on dips from profit-taking shorts
some desks report. Semi-official names on the offer near the highs with
stops reported on a move over the 1.2900 area. 1.2700 handle to hold on
a dip the first time but stops likely building underneath. Hook
reversal showing from the toolbox suggests aggressive traders can buy
the rate on dips. Rate possibly getting spillover effect from GBP.

Support also from cross-spreaders as they unwind Yen. Official interest
noted traders say. Rate is an absolute screaming buy in my view—I can't
see further weakness being ignored by the buyers; conditions are right
to buy on the next pullback in my view. If oil rallies it might take
EURO with it. Expect more two-way action with upside bias; traders note
the rate is finding profit-taking bids on dips so far despite the
uncertainty in the market.

EURO/USD Daily

Resistance 3: 1.3150
Resistance 2: 1.3030
Resistance 1: 1.290

Latest New York: 1.2827
Support 1: 1.2660
Support 2: 1.2580
Support 3: 1.2500

Data due Tuesday: All times EASTERN (-5 GMT)
4:30am GBP Construction PMI
7:01pm GBP Nationwide

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