While a correction lower was seen inevitable after the euro climbed 2.5 percent in one day on Friday, a barrage of comments from European officials on Monday in support of the single currency reduced the euro's pullback and kept the text-book bottoming pattern on the technical charts intact.

"From the technical perspective the picture for the euro looks encouraging and we have a good chance that we will get another leg up in euro/dollar tomorrow," said Johnathan Bayley, currency strategist at Paribas in Paris."The $0.92 level is the key level and it will be very disappointing if we break down below that, but I would be surprised if we did."

The euro pulled back to the day's lows around $0.9262, down more than half a cent from Friday's one-month highs around $0.9340. Euro/yen was hovering around 99.40/50, slightly below Friday's one-week highs around 99.90.

"So far this is a correction. Whether it's a reversal of fortune for the euro, it's too early to say - but the gains have to be respected," said Gilles Borrel, head of global treasury sales at Westdeutsche Landesbank in Paris.

The euro garnered modest support after Bundesbank President Ernst Welteke said foreign exchange intervention was in the "tool kit of central bankers" and that he welcomed a rise in the euro regardless of how it came about.

The comment reinforced perception in the market that the European authorities were becoming more serious about shoring up their beleaguered currency which has climbed about five percent from the record lows around $0.8840, hit on May 19. Later, French President Jacques Chirac said the euro zone must do more on Stability Pact goals and structural reforms, while Bank of France Governor Jean-Claude Trichet said the euro had a future as a strong currency.

His comments were followed by French Finance Minister Laurent Fabius, who said the euro was no "monopoly money" and he expected the currency to stabilise, but that it could take time for financial markets to realise the euro's merit.

"There is not a lot of liquidity so the euro is not as sensitive to their comments," said Bayley from Paribas."But Welteke's comments are interesting because he was playing on the possibility of intervention - keeping the risk of intervention up there." While verbal support for the euro in the past has had no lasting impact on the euro, traders said they were also watching a favourable bottoming pattern developing on the charts.

-- (Reuters)