EUR/USD recovers early lost ground, back above mid-1.2200s

   •  A modest USD recovery move seemed losing steam.
   •  EUR recovers lost ground after upbeat German ZEW survey.
   •  Wednesday’s EZ PMIs to provide some impetus ahead of ECB.

The EUR/USD pair extended its sideways consolidative price action and traded with a mild negative bias around mid-1.2200s.

A modest US Dollar rebound, backed by the news that Congress ended a three-day long government shutdown, exerted some downward pressure during the early part of Tuesday's trading session. 

The retracement slide, however, once again turned out to be short-lived and the pair found some support ahead of the 1.2215 region, following the upbeat release of German ZEW Economic Sentiment Index for January. 

Adding to this, the USD recovery move was also seen losing some steam and further collaborated to the pair's rebound of nearly 30-pips from an intraday low level of 1.2223.

Looking at the broader picture, the pair remains confined within 50-60 pips trading range as investors refrained from placing any aggressive bets ahead of the key event risk - Thursday's highly anticipated ECB monetary policy decision.

Today's US economic docket lacks any major market moving releases and hence, the pair seems more likely to extend its consolidative price action ahead of Wednesday's flash EZ PMIs, which although is unlikely to be a major game changer but might still provide some short-term trading opportunities.

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: “Technically, the short-term neutral stance persists, with the price hovering around a horizontal 20 SMA in the 4 hours chart, where technical indicators head marginally lower, but around their mid-lines, lacking clear directional strength. The pair needs to surpass 1.2280 to attempt a retest of the multi-year high of 1.2322, while it would take a break below 1.2200 for the slide to extend towards 1.2165. A break of the extremes seems unlikely today, as investors will likely wait for the ECB's announcement next Thursday  before taking a clearer position.”