EUR/USD Tests $1.1468: Breakout or Breakdown?

EUR/USD started the week on a strong note, above 1.1400 as the US Dollar struggled with trade tensions and political uncertainty. Late Friday, President Trump doubled tariffs on steel and aluminum imports from 25% to 50%, and accused China of breaking a mineral trade deal, threatening more trade retaliation.

This spooked investors, and the US Dollar fell. Monday, the US Dollar Index fell 0.3%, giving back recent gains.

Meanwhile, the Eurozone’s May Manufacturing PMI was steady at 49.4, its 5th consecutive improvement and the strongest reading in nearly 3 years. Germany’s PMI was revised lower to 48.3, reflecting the softness of Europe’s largest economy.

Technical Setup: EUR/USD Breakout Levels

On the 2-hour chart, EUR/USD is testing a key resistance zone near 1.1425-1.1468, an ascending triangle, a classic breakout pattern. The 50-period EMA at 1.1345 has turned from resistance to support, and the MACD histogram is showing bullish divergence with the signal lines crossing higher.

Recent candles are mixed. A series of doji candles near resistance suggest market indecision, but higher lows from May indicate bullish momentum building. Key levels to watch:

• Breakout Target: Close above 1.1468 could target 1.1508+

• False Breakout Risk: Failure to close above 1.1425 could see a pullback to 1.1312

EUR/USD – Event Risks and Trade Setup

This week’s Eurozone CPI and the ECB’s rate decision (Thursday) will be key. The ECB is expected to cut rates, which could challenge Euro bulls. US ISM Manufacturing PMI could either help the Dollar recover or deepen the decline.

Trade Ideas:

• Go Long if EUR/USD clears $1.1468 on strong volume and bullish candlestick confirmation. Target $1.1508+ with stops below $1.1381.

• Go Short on a reversal from resistance (watch for shooting stars or three black crows). Target $1.1312, with stops above $1.1468.