EUR/USD Spikes On Brexit Day
Shain Vernier • 1 min read
The day that many thought would never come is now here ― Brexit Day. After 3 ½ years of negotiations, elections, and general unrest, the United Kingdom is scheduled to leave the European Union at 11:00 PM London time. It has been a long road for the GBP and EUR to get to this point. Now, as the U.K. and E.U. prepare to split, the EUR/USD is on the bull.
For the time being, the bids hitting the EUR/USD aren’t really attributable to much other than Brexit. Last night brought a collection of slumping E.U. GDP figures and the U.S. session featured a surprise uptick in the Michigan Consumer Sentiment Index (99.8). Aside from the coronavirus X-factor, one can argue that the bullish breakout in the EUR/USD is a product of Brexit-stimulated participation.
EUR/USD Breaks To The Bull
In a Live Market Update from Thursday, I issued a short trade recommendation for the EUR/USD. The play initially performed well, generating 22 pips profit. However, bidders dug in at the 1.1010 level and sent the market skyward, wiping out the stop loss.
Now, it looks like all systems are “go” for EUR/USD bulls. Rates are marching north toward two key levels:
- Resistance(1): Big-Round-Number, 1.1100
- Resistance(2): Bollinger MP, 1.1109
Bottom Line: Now that Brexit appears to be finally happening, one has to wonder about the long-term implications for both the GBP and EUR. At least for now, forex traders are betting heavily on both currencies vs the Greenback.
If the rally continues in the EUR/USD, a counter-trend trade may set up by the closing bell. For the rest of the session, I will have sell orders in queue from 1.1094. With an initial stop at 1.1111, this trade produces a fast 15 pips on a slightly sub-1:1 risk vs reward ratio.