EUR/USD technical analysis: Trapped in a narrowing price range

• EUR/USD's 4-hour chart shows a pennant pattern, a bullish continuation setup. 
• A break above 1.1056 would confirm pennant breakout and open the doors to 1.11.

EUR/USD has charted a narrowing price range on a pennant pattern on the 4-hour chart. 

Pennants comprise trendlines connecting lower highs and higher lows and are widely considered as continuation patterns that mark consolidation before resuming the previous move in the same direction. 

As of writing, the pennant resistance is seen at 1.1056 and the support is located at 1.1036 and the pair is trading at 1.1047.

A break above 1.1056 would imply a resumption of the rally from the Sept. 3 low of 1.1027 and could yield a rally to 1.11. On the other hand, a break below 1.1036 may invite selling pressure. 

The European Central Bank is widely expected to cut rates further into the negative territory and restart the bond-buying program on Thursday. There is a growing consensus in the market that the dovish expectations have been priced in and the common currency could rise sharply if the central bank sounds less dovish-than-expected.

4-hour chart

Trend: Bullish above 1.1056

Technical levels