• EUR/USD hit new lows since March 31 at 1.1500 early Monday, but has since recovered to the 1.1550's

• 1.1513 is 76.4% Fibo retracement of the March-April rally from 1.1409-1.1849 - bears needed a close below

• Failure to close below key a technical level and subsequent bounce is called a bear trap - often a bullish signal

• Bullish EUR/USD and renewed USD weakness aligns with Morgan Stanley's latest FX strategy note

• 1.1553-28 is Tuesday's range - regaining prior supports at 1.1577-87 may ease fears of deeper declines

• Big FX option strikes at 1.1500 and 1.1550 can help contain range into the 10-am New York cut expiry

• Markets may remain sidelined ahead of Wed's US CPI, but June 17 Fed now seen as key near term USD/FX risk
EUR/USD daily chart (EBS)


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