The EUR/USD is driving toward the bull and finally breaking through the 1.1050-58 resistance area. Rates are trending higher on fresh news that a final Brexit deal appears to be drawing near. A short while ago, reports began to surface that Boris Johnson informed members of Parliament that a deal “is almost there.” Although there are no details about what the deal may entail, currency players are bidding the EUR/USD higher in anticipation.

Several important Brexit dates are nearly upon us, including the E.U. Summit and the final 31 October divorce deadline. For the time being, Brexit uncertainty is ruling trade of the Euro and British pound. However, any hope for a U.K./E.U. deal is sending both currencies higher vs the Greenback.

EUR/USD Breaks Through 78% Fibonacci Resistance

In a Live Market Update from last week, I made a case for shorting the EUR/USD from the 1.1050-58 area. The play was good for 35 pips as rates were held in check by the daily 78% Fibonacci Retracement (1.1058). Now, it looks like the wheels are off and the rally toward September’s high is on.

For the near future, here are two levels worth keeping an eye on in this market:

• Resistance(1): September High, 1.1109
• Support(1): 78% Current Wave, 1.1058

Bottom Line: At press time (12:15 PM EST), it appears that the EUR/USD is destined to test the 1.1100 handle in short order. If so, a shorting opportunity may set up from beneath September’s high (1.1109). 

Until elected, I will have a short scalp in play from 1.1104. With an initial stop at 1.1113, this trade produces a fast 6-8 pips on sub-1:1 risk vs reward ratio. This is a countertrend play, so the element of risk is enhanced. If you are going to take the sell, be sure your stops are down and leverage is in check!