positive news from Cyprus could have Euro pick up some strength for rebound.

Cyprus was the center of focus last week. But we'd like to point out that despite the turmoil in Cyprus and weak economic data, Euro's selloff was rather limited. Indeed, there were some strength for recovery towards the end of the week as EUR/USD closed at 1.2983, not far from 1.3 psychological level. Cyprus' situation seemed to have some breakthrough after ECB set March 25 deadline to ELA support. And positive news from Cyprus could have Euro pick up some strength for rebound initially this week. Nonetheless, we'd be cautious as some near term resistance levels in Euro pairs need to be violated to confirm underlying strength for rebound.

Technically, We'll monitor these levels in Euro pairs, including, 1.3106 in EUR/USD, 126.03 in EUR/JPY, 0.8601 in EUR/GBP and 1.2622 in EUR/AUD. We'd prefer to see at least two of these levels broken before confirming the strength and go long in Euro. Meanwhile, note that GBP/USD should have formed a short term bottom at 1.4830 and strong rebound is anticipated in near term. AUD/USD carried on the near term strength as expected. Yen would possibly engage in more consolidative trading. Hence, in case of Euro rebound, we'd prefer to go long in EUR/USD.

So in short, we'd firstly maintain long position in AUD/USD for 1.06. Secondly, we'd wait for some more indication to long EUR/USD.