EUR/USD holds stable above 1.24 handle, ECB awaited

   •  A modest USD rebound prompts some profit-taking.
   •  Traders lighten bullish bets ahead of ECB decision.
   •  Draghi’s comments could make or break the bullish trend.

The EUR/USD pair reversed early gains to fresh 3-year tops and is currently placed in neutral territory as investors now move to the sidelines ahead of the ECB announcement.

As the European session got underway, a modest US Dollar recovery, possibly led by some bearish exhaustion amid near-term oversold conditions, triggered profit-taking from an intraday high level of 1.2459. 

Heading into today's key event risk - the highly anticipated ECB meeting, traders also seemed inclined to lighten their bullish positions, which further collaborated to the pair's retracement of around 70-pips from session tops to sub-1.2400 level. 

The corrective slide, however, remained limited as the shared currency found some support from upbeat German Ifo business climate index, which unexpectedly improved to 117.6 points in January as against last month's 117.2 and expectations of 117.1. 

Market participants now eagerly await the ECB monetary policy decision and the subsequent press conference, where the ECB President Mario Draghi's comments should infuse volatility across EUR crosses.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: “Shorter term, and according to the 4 hours chart, technical indicators have lost their upward strength, consolidating in overbought readings as investors wait for the event and leave the pair confined to a tight range. The 1.2460 high is the immediate resistance ahead of the 1.2500 figure, where the pair may stabilize before extending its advance.  To the downside, an intermediate support comes at 1.2360, with a stronger one at 1.2320, the high set last week.”