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With Cyprus crisis developments changing by the minute, and its Finance Minister on an undefined visit over Moscow looking for aid, EUR/USD is last trading around the $1.2950 area, slightly higher for the Asian session.

The pair has been ranging around the mentioned $1.2950 quote since early Monday morning in Europe, printing a fresh 4-month low on Tuesday at $1.2842, finding support so far at the 200 day SMA around $1.2875 last.

This level represents also a key Fibo confluence area, as the 38.2% retrace of the daily up leg $1.2035/$1.3711 coming from past July lows. Trouble for buyers though could start a little higher around the $1.2900 round figure, as Valeria Bednarik, Chief Analyst at Fxstreet.com, points out, "in the 4 hours chart, technical readings continue to support the downside."

With the non-event FOMC left behind, where it was noted by the Fed that "the pace of its asset purchase plan (currently $85 billion per month, made up of $45B of MBS and $40B Treasuries) will be adjusted to reflect progress towards meeting its objectives."

For the FED, "we expect to see the end of QE3 at the turn of the year," says senior U.S. strategist at Rabobank Jan Lambts.

But all eyes are now focused on Cyprus next move, as time is ticking against their financial system. Expect headlines related to the Cyprus debt crisis to set the sentiment tone in the market until the fluid situation recedes.

"Market optimism that a resolution will occur soon seems to rest on the prospect of Cyprus passing a bill that includes a much smaller tax on deposits that exempts small depositors and somehow raises substantial funds elsewhere," said FX strategist at Westpac Sean Callow, "it seems that for now, it is unlikely Russia will do more than roll over its existing loan," he reckons.

In the meantime, the ECB is pressing on Cyprus' government to find a solution soon, or else it's threatening to cut off funding to Cypriot banks, Reuters reported. There's yet another day ahead likely to find banks closed across the nation, a fourth consecutive day that this occurs, and with the odds stacked for the drama to go on a few more days.

In the next European morning, the EU PMI's will make the rounds starting as soon as 08:00 GMT for France, followed by largely awaited German PMI 30minutes later. France will also deliver a sovereign debt auction, with markets paying close attention to yields dealt, as a sign on possible risk of contagion from the Cyprus case. Later on U.S. Existing home sales and Philly Fed at 14:00 GMT will add to the economic agenda, ahead of key German Ifo business climate survey tomorrow (Friday).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Source: EUR/USD Holds Below $1.30, Watch Cyprus-Led Swings