EUR/USD eases from highs, remains capped below 1.18 handle

   •  Hold minor gains amid a modest USD weakness.
   •  EUR weighed down further by softer German ZEW index.
   •  Investors seemed reluctant ahead of this week’s FOMC/ECB decision. 

The EUR/USD pair trimmed some of its early gains and has now retreated around 20-25 pips from the vicinity of the 1.1800 handle. 

After yesterday's good two-way moves, the pair gained some positive traction on Tuesday but failed to capitalize on early up-move despite a weaker trading sentiment surrounding the US Dollar. 

Meanwhile, a sharper-than-expected retracement in the German ZEW economic sentiment index, coming in at 17.4 for December as compared to previous month's 18.7, was further seen weighing on the shared currency over the past couple of hours. 

It, however, remains to be seen if bears are able to decisively take out 50-day SMA important support near the 1.1760-55 region as the focus remains on the highly-anticipated FOMC decision, which along with the ECB announcement on Thursday would help investors determine the pair's next leg of directional move. 

Today's US economic docket, featuring the release of PPI print, is unlikely to provide any meaningful impetus ahead of this week's key event risks.

Technical levels to watch

Immediate support remains near the 1.1760 region, below which the pair is likely to head towards testing 1.1730 level en-route the 1.1700 handle. On the upside, any meaningful up-move is likely to confront fresh supply near the 1.1800 round figure mark, which if cleared might trigger a short-covering bounce back towards 1.1860 supply zone.