EUR/USD Challenges 62% Retracement

Thursday’s U.K. Brexit vote had forex traders waiting for the outcome with bated breath. Subsequently, most currency pairs posted tight daily ranges, especially the USD/CHF. Today’s action has been much more directional, featuring a nice move to the bull in the EUR/USD.

The results of yesterday’s vote were two-fold. First, U.K. lawmakers agreed to a short delay in the Brexit process. Perhaps more importantly, a motion for a second Brexit referendum was denied. So, U.K. PM May will now seek approval from E.U. leadership on delaying the March 29 Brexit Day deadline. Only time will tell us what is going to happen, but thus far Euro backers are enjoying the news.

EUR/USD Technical Outlook

On the daily chart, the EUR/USD is currently challenging a key 62% Fibonacci retracement level. This has been a big area for the past three sessions. It is likely that a directional move ― to the bull or bear ― will begin from 1.1325.

Here are the key levels to watch for the rest of the day:

• Resistance(1): 62% Retracement, 1.1326
• Support(1): Bollinger MP, 1.1315
• Support(2): Daily SMA, 1.1311

Overview: The EUR/USD has become severely compressed between the 1.1325 and 1.1300 handles. In the coming sessions, a breakout from this area is probable. A basic read for trading this market is to be bullish above 1.1325 and bearish beneath 1.1300.

Of course, next Wednesday’s FED Monetary Policy Statement is going to shake up the entire forex. The technical outlook for the EUR/USD is very likely to be completely different this time next week.