FX trade was relatively quiet through the N.Y. session, as reaction to the Cyprus situation largely ran its course. EUR-USD steadied under 1.3000 after touching N.Y. lows of 1.2920 in early dealings. Sellers quickly returned into the 1.3000 level, as uncertainty over Cyprus and Italy remain in place. USD-JPY found support under 95.00, and slowly climbed over 95.40 in afternoon trade. The U.S. economic calendar was light, with just the NAHB housing market index on tap. The index unexpectedly slipped to 33 from 36, though had little market impact.

[EUR, USD]
EUR-USD recovered to trade back over 1.2950 versus new 2013 lows seen in late Asia at 1.2882. According to wire reports Cyprus will make new deposit tax proposals of 3% on deposits up to EUR 100k, a 10% levy on deposits up to EUR 500k and a 15% levy above EUR 500k. The news has offered some semblance of stability for the EUR, though there is still likely to be residual uncertainty over other euro member states. From a technical perspective, the gap lower at the Asia Pacific open and severely oversold momentum studies pointed to some corrective action after the 200-dma held at 1.2872. The Cyprus central bank governor said ECB has promised to give Cyprus liquidity if parliament approves the proposed bank levy, which is due to go to vote at 14:00GMT.

[USD, JPY]
USD-JPY rebounded out of 94.35 at the European open to trade at rally highs just over 95.10. The EUR recovery was the catalyst for USD-JPY gains after EUR-JPY reached 123.35, which compared with lows around 121.50 in early Asia. USD-JPY dropped sharply at the Asia Pacific open from 95.30 to the 94.10, where very strong Japanese support emerged. USD-JPY slipped to 94.85 in early N.Y. trade, though found good support from option and Japanese names. The pairing then slowly moved higher through the afternoon, peaking over 95.50.

[GBP, USD]
Cable benefited from EUR recovery and traded out of 1.5075 back up to the 1.5140 region into the N.Y. open. Comments from BoE's McCafferty indicated that policy makers are not keen on further GBP weakness. Adding to the supportive backdrop was today's 1.5100 expiries, which were up to GBP 1.5 bln and fueled gamma hedging on dips. Cable did fall back under 1.5100 in afternoon trade. We expect the U.K. government to reaffirm its austerity drive this Wednesday at its 2013-14 budget statement, while announcing further "monetary activism," such as an extension of the Funding for Lending Scheme. There is also an outside chance that Chancellor Osborne will tweak the BoE's remit to give it more leeway over the 2% inflation target or adding a growth target, or at least open the issue up for consultation before the arrival of new governor Carney.

[USD, CHF]
EUR-CHF closed the overnight gap lower. It rallied from 1.2170 in early Europe to levels over 1.2250. The more stable tone was in part due to EUR-USD short covering. There was also evidence of bargain hunting from local names benefiting from EUR-CHF's move under 1.2200 for the first time since late February. SNB's Moser gave the market a timely reminder on the potential for negative interest rates. This is unlikely in our opinion and simply a ploy by Swiss policy makers to head off any heavy pick up in swissy inflows. However, it did trigger a EUR-CHF spike from 1.2215 to 1.2290 highs before prices settled back into the 1.2230-50 zone.

[USD, CAD]
USD-CAD was contained by the 1.0210 to 1.0240 band though most of the session on Monday, and turned back toward 1.0225 after taking a quick look at reported bids into the figure. Trade ws very quiet, and with sellers from 1.0250, ranges are likely to hold up overnight as well.