Forex - EUR/USD falls as Cypriot bailout optimism wanes

The euro fell against the dollar on Monday after investors grew wary of the impacts a European bailout will have on Cyprus even though the country will remain in the eurozone.

Earlier Monday, eurozone finance ministers and the International Monetary Fund approved a EUR10 billion rescue package for Cyprus provided the country close up its second-largest lender, Laiki Bank.

In U.S. trading on Monday, EUR/USD was down 0.85% at 1.2880, up from a session low of 1.2866 and off from a high of 1.3048.

The pair was likely to find support at 1.2844, Tuesday's low, and resistance at 1.3048, the earlier high.

The bailout deal guaranteed that accounts holding EUR100,000 or less will continue to be insured and likely shifted to another financial institution, though larger depositors and bondholders in the bank will take a haircut, which sent the euro wiping out earlier gains. 

Eurogroup head Jeroen Dijsselbloem said earlier terms of the rescue package may serve as a template for other European bailouts, which rattled nerves on expectations that future financial lifelines may require banking-sector restructurings.

Markets were eagerly awaiting Federal Reserve Chairman Ben Bernanke to speak later in the day and provide insight into U.S. monetary policy, which the U.S. central bank left unchanged last week.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.49% at 0.8488, and EUR/JPYtrading down 0.88% at 121.67.

On Tuesday, Germany is to produce official data on retail sales, a key indicator of overall economic health.

Later Tuesday, the U.S. is to release a flurry of economic data with government reports on durable goods orders and new home sales as well as a report on consumer confidence.

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