EUR/USD surrenders early gains to weekly tops, ECB holds the key

   •  Retreats from weekly tops as USD recovers.
   •  ECB monetary policy decision remains in focus.
   •  Draghi's speech to drive Euro in the near-term.

The EUR/USD pair surrendered majority of its early gains to weekly tops, near the 1.1840 region and has now moved on the verge of breaking into negative territory. 

The pair's retracement since early European session has been primarily driven by a modest US Dollar rebound, supported by a pull-back in the US Treasury bond yields. Speculations that the next Fed Chair could be more hawkish continued limiting any deeper USD retracement and kept a lid on the pair's up-move. 

Heading into the key event risk - ECB monetary policy decision, some repositioning trade might have also collaborated to the pair's slide back closer to the lower end of the daily trading range, around the 1.1815-10 band. 

   •  EUR/USD attention to the 1.1858/1.1910 band – Commerzbank

Meanwhile, today's release of German Gfk consumer climate and Spanish employment data passes unnoticed as investors' focus remains glued to the outcome of highly anticipated ECB meeting. 

The ECB is scheduled to announce its monetary policy decision at 1145 GMT. The central bank is widely expected to keep rates on hold but is anticipated to announce tapering of its €60 billion monthly bond purchase program. 

Investors would also scrutinize the ECB President Mario Draghi's speech, during the post-meeting press conference in order to determine the shared currency's next leg of directional move. 

   •  ECB preview: Dovish tapering? - ING

Technical levels to watch

Immediate support is pegged near the 1.1800 handle and is closely followed by support near 1.1785 level. Break below the mentioned supports might turn the pair vulnerable to break below the 1.1700 handle and head towards testing 100-day SMA support near the 1.1675-70 region.

On the flip side, any meaningful upside is likely to confront strong resistance at 50-day SMA, near mid-1.1800s, which if conquered might trigger a short-covering rally back towards the 1.1900 handle en-route its next major hurdle near the 1.1940-50 region.