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The European Central Bank announced on Thursday that it would cease providing financial support to Cypriot banks next Monday, unless the government in Nicosia reaches an agreement on the rescue program. This adds to the already large pressure on the euro.

According to the official release: “The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013. Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks.”EURUSD Pressured as ECB puts deadline for Cyprus exit of euro zone possible March 21 2013

In case of the Cypriot government’s failure to strike a bailout deal by the appointed date, the country would only be able to receive financial support if the IMF and the Eurozone establish a program guaranteeing the solvency of affected banks.

While this news will certainly spark talk of Cyrpus leaving the EUR, the markets have not reacted to this for the time being. EUR continues to trade below the 1.2920 level, but as I write this has not fallen below 1.2900.

This news could be the major story for the rest of today.

See levels and events in the EURUSD forecast.