EUR/USD technical analysis: Under pressure, but risks skewed to the upside

• The candlestick setup on EUR/USD’s daily chart favors an extension of the recovery rally from recent lows near 1.0926.
• The pair could challenge resistance at 1.1107 in the run-up to Thursday’s ECB event.

EUR/USD is currently trading at 1.1043, down 25 pips from the high of 1.1068 reached on Monday.

The candlestick arrangement on the daily chart indicates the risks are skewed to the upside.

Notably, the pair created a bullish outside day candle on Monday, which occurs when the day begins with pessimism, but ends on an optimistic note, engulfing the price action seen in the preceding period.

More importantly. Monday’s bullish outside day marks an upside break of the consolidation or indecision represented by Friday’s inside day candle.

Put simply, the path of least resistance is to the high side and the pair could rise to 1.1107 (May 23 low) ahead of Thursday’s European Central Bank rate decision.

The bullish case would weaken if the pair drops below 1.1015 (Monday’s low).

Daily chart

Trend: Bullish

Technical levels