• EUR/USD regains ground above 1.1200 from 16-month lows at 1.1161 on Monday as Oat/Bund spreads narrow

• However, French budget debates are not due until next week so overall recovery could be limited until then

• Relief rally so far extending to 1.1248 where its run in to mild resistance, potential for stops above Friday's high at 1.1261

• However, traders cite 1.1310/30 - where Thursday's breakdown began, as the most likely spot for fresh sales

• FX option prices are retreating from 7-month highs as the spot slide stalls, but shows caution, whilst also warning of 1.1000 risk
EUR/USD daily chart (EBS)

(Richard Pace is a Reuters market analyst. The views expressed are his own)