"A test of the $1.4283 level is extremely likely in the next couple of days, if not today." The euro also drew support from a relatively strong Spanish T-bill auction, where demand rose and the yield fell compared with the last sale. Japan again warned it would act to keep the yen in check, but traders saw no action in the FX market on Tuesday from Japanese or other G7 authorities following last Friday's joint intervention. That resolve could be tested if dollar/yen looks like it will break back below 80 yen. The dollar last traded at 80.95 yen, down marginally on the day but in the middle of the day's narrow range of 80.80-81.30 yen. Yen volatility has eased significantly since late last week, and some analysts said calmer markets in the coming weeks would decrease the need for Tokyo to smooth any appreciation in the Japanese currency, even if the dollar creeps below 80 yen.

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