Euro was under pressure on Monday initially following Friday's selloff and nose-dived to 1.2234 in Asian morning trading, the lowest level in more than four years against the dollar on worries that the austerity measures mandated by the EU/IMF 750 billion euro bailout package would dampen the 16-nation currency region’s fragile recovery. The single currency later pared intra-day loss and bounced briefly but strongly to 1.2415 on short-covering, euro softened again before another rise was seen in NY morning session after finding renewed buying at 1.2282. The single currency later rebounded strongly again amid speculation that euro's 3.4% decline since 10 May might be overdone. A turnaround in U.S. stocks (DJI pared all initial losses and ended up in slight positive territory, DJI ended up by 5 points) also supported euro. In other news, ECB's Stark said that the crisis in the eurozone is severe and should serve as a wake-up call to European politicians. Eurogroup Chairman Juncker also said that he was worried about the pace of the euro's fall than the exchange rate itself.

The British pound also remained under pressure initially on Monday and tumbled to 1.4249 in Asian session after weekend news report of U.K. FT interview with the new finance minister George Osborne who said Britain's new government inherited 'fiddled' public finances and dire fiscal legacy by the previous Labour government. However, cable then rebounded strongly on M&A related demand (Britain's Prudential launched its $21 billion rights issue on Monday) together with short-covering. In other news, U.K. CBI manufacturing order book balance came in at -18 in May, much better than economists' forecast of -32 and the reading of -36 in April. Despite sterling's brief retreat from 1.4509, cable managed another rebound from 1.4364 to around 1.4499 in tandem with euro in NY afternoon.

Versus the Japanese yen, the greenback dropped to 91.76 in Asian afternoon but the pair then rebounded strongly to 92.69 as European equities pared Friday's losses and traded in positive territories. However, the greenback was pressured by the release of weaker-than-expected New York Fed's Empire state index which came in at 19.11 in May, much lower than the economists' forecast of 30.00. The pair later staged a another rebound and ended the day at 92.58.

Economic data to be released on Tuesday include: Japan Tertiary industry index, Consumer

confidence, Machine tools orders, U.K. CPI, Germany ZEW index, EU Trade balance ,HICP,

U.S. Building permits and PPI .