EURUSD has been trending higher on its short-term time frames but a look at the daily chart reveals that the pair is still consolidating inside an ascending triangle pattern.

The resistance around the 1.1500 major psychological held on the latest test, possibly sending price back towards support near the 1.1200 major psychological level.

The 100 SMA is above the longer-term 200 SMA, indicating that a bounce is possible. If so, another test of the triangle resistance or perhaps an upside breakout might take place. Stochastic and RSI are both on the move down for now, which suggests that price could head back towards the bottom of the triangle.

If selling pressure is strong enough, a downside breakout might take place and put EURUSD on a downtrend of close to a thousand pips or the same height as the triangle pattern. On the other hand, a strong surge in buying momentum could lead to an upside break of the resistance and a long-term uptrend.

The biggest catalyst for this setup is the ECB interest rate decision this week, as traders are awaiting dovish remarks from the central bank. In their previous rate statement, Governor Draghi shared that they're open to increasing their stimulus program if inflationary pressures keep weakening. This was followed by a downbeat inflation report, as the headline CPI showed a 0.1% decline in price levels.

Any indication that the ECB is moving closer towards boosting its quantitative easing efforts could mean significant declines for the euro, especially since the region has suffered deflation in September. On the other hand, reassuring remarks from Draghi saying that the dip in price levels is just temporary could allow the shared currency to stay afloat.

As for the US dollar, speeches from the Fed officials have suggested that a liftoff is still possible before the end of the year. Fed head Yellen didn't provide any strong clues or changes in her monetary policy bias for the time being, even as data from the US have been somewhat subpar.

Editor’s Note: Equity investors/traders can use the Currency Shares Euro Trust (FXE, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the euro (EURUSD), minus ETF fee. The fund seeks to reflect the price of the euro with the shares representing a cost-effective investment relative to investing in the FOREX market.

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