EUR/USD Buyers Eye Breakout as Triangle Pattern Develops Amid Dollar Weakness

05/05/2025

Market Overview

The euro advanced modestly against the US dollar in early Monday trade as renewed uncertainty surrounding US-China trade relations weighed on greenback sentiment. US President Donald Trump’s remarks over the weekend—indicating no immediate plans for talks with Chinese President Xi Jinping—fueled doubts about the path of tariff negotiations. Meanwhile, the UK bank holiday contributed to thinner liquidity in the European session, keeping broader risk appetite subdued but allowing EUR/USD to climb in a low-volume environment.

Technical Analysis

On the 1-hour chart, EUR/USD remains confined within a symmetrical triangle, which has emerged following a corrective phase against the broader downtrend. Bulls have managed to pierce through the minor ceiling at 1.13469, pushing the pair towards the next key resistance at 1.13567. A confirmed breakout above this level could extend the rebound toward the confluence of the 161.8% Fibonacci projection and the descending trendline from the previous week around 1.13691. If momentum persists beyond this area, a test of 1.13828 becomes a valid short-term objective.

Oscillators confirm bullish bias: RSI trades above 50 and tilts higher, while MACD has printed new bullish bars, suggesting strengthening buying interest. However, failure to clear 1.13691 could result in continued consolidation within the triangle, potentially dragging price back to 1.13332 or the lower boundary at 1.13110. A break below the triangle would signal the resumption of the prior downtrend.

Key Technical Levels

Resistances: 1.13567, 1.13691, 1.13828
Supports: 1.13469, 1.13332, 1.13110

Fundamental Drivers

Attention turns to the ISM services and manufacturing PMIs scheduled for release later today. Market consensus expects softer prints compared to previous readings, reflecting a possible cooling in business activity. Should the data fall short of expectations, it may add further pressure on the dollar and provide tailwinds to EUR/USD. However, any upside surprise could limit euro gains by reviving dollar demand. With inflation concerns and rate cut speculation lingering, this data set may shape near-term monetary expectations.