EUR/USD extends recovery, but faces ECB risk and resistance at 1.14

EUR/USD edges higher toward a key resistance level, but Euro is yet to climb as the market remain cautious ahead of the European Central Bank (ECB) rate decision later this week and critical US data scheduled for today.

Incoming red folders

This week’s main event risk is the ECB rate decision on Thursday. Markets widely expect a 25 bps rate cut, but the forward guidance will be the real market mover. A dovish tone could cap further EUR upside, while any signs of caution or delay could trigger a squeeze higher.

Meanwhile, the US dollar faces its own test today with the ISM Manufacturing PMI. A strong print could lift the dollar broadly, adding pressure to EUR/USD’s fragile recovery.

Technical outlook: Euro facing resistance despite recovery

Daily

Euro is currently testing the premium and resistance level resting at 1.133 to 1.14 level. Although Euro is facing resistance, the underlying strength of Euro is coming from the sweep of the lows of the current range, signaling sell-side liquidity has already been taken out.

Four-hour

Looking at the 4-Hour timeframe, an obvious take out of the liquidity of the range is present. The probability for more upside increases as the 4-Hour Fair Value Gap resting at 1.12828 - 1.13390 level is acting as a support for Euro. As long as the FVG remains intact, we might see further upside for Euro. If it gets invalidated by breaking below, downside risk could return on the table.

Dollar on the edge: Could push Euro for a sustained upside

As the greenback continues on its downside move, this could benefit the upside trajectory of Euro and will add to a renewed strength with new highs on the horizon. Unless Dollar recovers or gets traction with the incoming ISM tonight, Euro will continue to climb higher.

What to watch next

• A rejection from 1.1375 and lower high on lower timeframes could confirm short-term weakness.
• A break and close above 1.1375 could target the 1.1400 psychological level and reopen room toward 1.1500.
• The confluence of macro uncertainty (ECB, ISM, NFP) and technical resistance makes this zone critical.

Trade ideas

• Bearish Setup: Look for signs of rejection at 1.1375 with confluence from lower timeframes. Target: 1.1312 > 1.1130.
• Bullish Setup: Break and hold above 1.1375 on H4 with momentum. Target: 1.1400 > 1.1450.
• Invalidation: Daily close beyond 1.1400 invalidates near-term bearish bias.