Ok, I was able to fix the issue with resolution by increasing the qube’s video ram in Xen config.
You can test whatever this will fix it for you as well by running these commands in dom0:
sudo mkdir -p /etc/qubes/templates/libvirt/xen/by-name/
cat << 'EOF' | sudo tee /etc/qubes/templates/libvirt/xen/by-name/YourQubeName.xml
<!-- import default template-->
{% extends 'libvirt/xen.xml' %}
<!-- we wanna alter the devices block -->
{% block devices %}
<!-- import default device block -->
{{ super() }}
<!-- manual video config -->
<video>
<model type='vga' vram='32768' heads='1' primary='yes'/>
</video>
{% endblock %}
EOF
Change YourQubeName
to your qube name.