ANALYST: Europe Isn't Going To Blink

First, the Eurogroup blinks and provides much more funds. Second, the Eurogroup stands firm and Cyprus is eased out of the EZ with ECB liquidity support ensuring a relatively orderly exit. Third, some face-saving compromise is found but where Cyprus would still deliver the bulk of the €5.8bn in question. Fourth, Russia enters the stage as a white knight. I doubt the Eurogroup will blink, and the next 24 hours will be dominated by the negotiation between it and Cyprus. Negotiation 101 tells you the most important factor is which of the parties hold the strongest cards. My estimation is that Cyprus holds the weakest cards.

The big story right now is all about what emerges from the Cyprus talks in Russia.

The Finance Minister is holding a press conference there in a couple of hours. Europe does not Russia to gain a bigger foothold there, which is one reason there might be some compromise.

But Cyprus just seems too small to have any leverage in these negotiations, and the political situation at home in Germany isn't conducive to Angela Merkel giving in much.