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The euro recovered the 1.2900 mark against the dollar in the early American session, but the movement was rejected later and the EUR/USD is closing below this level. However, it was still positive on Monday, with 0.31% daily gains from opening price to the current 1.2885.

All players were warning about the bearish possibility in the par, and despite the EUR/USD, it jumped from the 1.2800 zone in Asia to reach intra-day highs at 1.2935 as experts were remembering about the vulnerability of the euro.

Monday's ISM data pushed the market into a positive mood with an unexpected rise to 51.5% -- the first read in the expansion field since May 2012. The stock market reacted up, increasing about 1%. In the late session, however, Wall Street tempered gains on European concerns about Greece and its draft austerity plan, which was not well-received.

Late in the U.S. session, Reuters' headlines hit the wires, saying that Spain is finally prepared to bite the bullet and request a eurozone bailout this coming weekend. However, the possible request is facing opposition from Germany, which recommends the Iberian country hold off on any external aid, according to unnamed European officials cited by Reuters.

Yet the future of the EUR/USD is not that clear, as the U.S. has its own issues. On one hand, in an attempt to boost the sluggish economy, the Fed embarked in an aggressive asset-buying program, known as quantitative easing. On the other hand, presidential elections and the fiscal cliff could weigh on the USD.

In the short term, EUR/USD is back to the magnet area around 1.2885 where it stands. "The EUR/USD hourly chart shows a pretty neutral stance at the time being, with indicators aiming lower in positive territory, as the price stands above a bullish 20 SMA," commented Fxstreet analyst Valeria Bednarik.

In bigger time frames however, "the bearish corrective movement from mentioned 1.3172 seems not yet over, as lower lows and lower highs are being printed daily bases, while indicators lack any kind of upward momentum," points Bednarik. "Either and advance above the descendant trend line today at 1.2930, or a break below the 1.2800 area, will likely set a clearer trend for the pair, with 1.2750 then the most likely target."

Continuing in the middle term, the TD Securities team remains bearish on the longer term. "Support just above 1.2800 was the overnight floor though, and the recent bid for risk currencies has seen the single currency rise more than a big figure higher," said the TD Securities team. "All that, however, remains roughly within recent ranges. Taking a step back, we think this bear trend (since mid-September) still has further legs. Core eurozone-U.S. 2-year spreads being more consistent with EURUSD sub-1.25 is one factor that keeps us confidently bearish."

Meanwhile, BBH analysts note that the technical tone is weak. "The attempt to rally in the second half of last week failed and the euro finished the week near the recent multi-week lows. The technical tone is poor, with momentum indicators pointing down. In the coming days, the 5-day moving average will most likely cross below the 20-day moving average, confirmed the downtrend," they explain. "A break now of the $1.2775-$1.2800 area signals another 1-2% decline. It requires a move above the $1.3000-50 area to signal a new leg higher, which we had previously thought possible."

The RBA Interest Rate Decision is a key event to follow in Asia today. The market expects that the central bank will hold rates unchanged at 3.5%. The UBS analyst team said in a recent report that they "expect the RBA to cut the cash rate by 25bp this week."

More data to pay attention to is the PMI construction report in the U.K. at 8:30 GMT, and Producer Price Indexes in the eurozone at 9:00 GMT.

Source: Forex: EUR/USD Closes Below 1.2900; Spain Plans To Request ECB Bailout