EUR/USD Technical: Poised for a minor bullish breakout in euro strength

[Redator]

The euro has staged a remarkable bullish reversal against the US dollar last Friday, 1 August, ex-post weaker-than-expected US non-farm payrolls data release.

The EUR/USD jumped by 1.5% which put a halt to the prior week-long corrective decline from the 24 July 2025 swing high of 1.1789.

Since Monday, 4 August, the EUR/USD has drifted in a tight sideways range of 69 pips as market participants digest a slew of data and news flow in the past few sessions, rising stagflation risk due to a flat US ISM Services PMI print for July, while its Prices Paid sub-component jumped to a three-year high.

Also, US President Trump’s upcoming nomination for the replacement of the outgoing Fed Governor Kugler, who resigned last Friday that is likely to be made known by the end of this week.

Let’s decipher the short-term movements of the EUR/USD from a technical analysis perspective.

Fig. 1: EUR/USD minor trend as of 6 Aug 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

A potential minor bullish breakout may occur at this juncture for the EUR/USD after three sessions of sideways consolidation.

Bullish bias with key short-term pivotal support at 1.1520 and a clearance above 1.1600 (also the 50-day moving average) sees the next intermediate resistances coming in at 1.1640, and 1.1680/1705 (see Fig. 1).

Key elements

• The hourly RSI momentum indicator has managed to stage a series of “higher lows” while remaining on support by a parallel ascending trendline in place since 31 July. These observations suggest a potential build-up of short-term bullish momentum.
• The hourly Bollinger Bandwidth has flashed out a “volatility squeeze” condition where it drifted to an extreme low contraction level of 0.2 on Tuesday, 5 August.
• A “volatility squeeze” condition precedes a potential price action breakout movement in the EUR/USD.

Alternative trend bias (1 to 3 days)

Failure to hold at 1.1520 invalidates the bullish scenario where the EUR/USD may see a minor slide to retest the next intermediate supports of 1.1460 and 1.1400 (1 August 2025 swing low).

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