EUR/USD is ripe for a pull-back after touching a key technical level amidst heigthened risks surrounding the European Central Bankrate meeting.

Such a confluence of technicals and fundamentals strongly suggests the possibility of a pull-back: major moving averages such as the 50 or 200-day, week and month offer dynamic support and resistance where prices often stall, pull-back or even reverse trend completely (note the pull-back at the 50-month MA on chart below).

Why? Because traders tend to pack these areas with fresh orders.

Add this to the fact the ECB rate meeting is probably one of the biggest influencers of the Euro's exchange rate from a purely fundamental perspective, and we have the potential for a reversal in EUR/USD.

What's more, the Euro has appreciated so much recently that many are saying it is either overbought, overvalued or simply just too expensive for the ECB's liking.

The last point is a major focus for markets as speculation mounts as to whether the ECB will say anything about the strength of the Euro in their meeting statement of if President Draghi mentions it in the press conference afterward.

It's highly likely Draghi will have to answer questions on the strong Euro from the press, so it only remains to be seen what he will say.

Objectively there is a case for the Euro being too strong and stunting inflation growth, the very thing the ECB is desperately trying to engineer, but whether the ECB will attempt verbal intervention to bring it down is difficult to say.

There is a risk they will and the Euro will lose ground - a risk increased by the fact the exchange rate has run into the formidable obstacle of the 200-month MA and so will encounter much technical selling too.

Nevertheless balanced against that risk is the reality of the current seemingly unstoppable uptrend.

Analyst Karen Jones, of Commerzbank, notes the interaction with the 200-month MA but reminds us that the market still "looks extremely bid," and says an "overshoot" is possible up to a ceiling of Fibonacci resistance at 1.2525/1.2600.

(Commerzbank's EUR/USD chart)We are reminded, therefore, not to get too bearish and attempt to call a top.

Yet at the same time that the exchange rate will not be discussed at the ECB meeting today seems almost impossible now.

Three members of the ECB governing council have already expressed concerns about the Euro - or suggested it needs monitoring - and that was when it was at 1.20 (its now at 1.24).

Back then analysts from Nordea and Credit Suisse, amongst others, have said although the ECB might be able to live with 1.20, 1.25 was definitely too rich for them, and we are now just a whisker's breadth away from that level.

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