In Asian trading Tuesday, EUR/USD rose 0.03% to 1.2961. In U.S. trading Monday, EUR/USD slid down 0.71% at 1.2983, up from a session low of 1.2882 and off from a high of 1.2995.
The pair was likely to find support at 1.2880, the low from Dec. 7, 2012, and resistance at 1.3107, Friday's high.
Last week, the European Union and the International Monetary Fund approved a plan to force Cyprus to tax all bank deposits of less than EUR100,000 at a rate of 6.75% and deposits above EUR100,000 at a rate of 9.9%.
EU officials have since backed away from the plan to tax small Cypriot depositors, but one official said the EUR5.8 billion target could be reached by taxing deposits north of EUR100,000 at a rate of 15.6%.
Cyprus, which is home to just 1 million people, balked at the deposit levy plan and on Sunday delayed a vote on the measure, sending chills down the spines of investors the world over. Cyprus is already on the brink of being the fifth euro zone nation to require a financial bailout since 2009.
Elsewhere, the eurozone reported that its trade surplus narrowed to EUR9 billion in January from EUR10.3 billion in December. Analysts were expecting the surplus to widen to EUR10.9 billion.
Cypriot banks will remain closed today to prevent a possible bank run. Traders will be eying new developments out of the country as well as well as a report from the ZEW Institute, which will release its index of German economic sentiment, while the U.S. is to release official data on building permits, a leading indicator of future construction activity, and data on housing starts.
Meanwhile, EUR/JPY is higher by 0.31% at 123.76 while EUR/AUD is up 0.09% at 1.2470.
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