We present photometric observations and analysis of the second microlensing event detected towards the Small Magellanic Cloud ( SMC ) , MACHO Alert 98-SMC-1 .
This event was detected early enough to allow intensive observation of the lightcurve .
These observations revealed 98-SMC-1 to be the first caustic crossing , binary microlensing event towards the Magellanic Clouds to be discovered in progress .

Frequent coverage of the evolving lightcurve allowed an accurate prediction for the date of the source crossing out of the lens caustic structure .
The caustic crossing temporal width , along with the angular size of the source star , measures the proper motion of the lens with respect to the source , and thus allows an estimate of the location of the lens .
Lenses located in the Galactic halo would have a velocity projected to the SMC of \widehat { v } \sim 1500 { km s ^ { -1 } } , while an SMC lens would typically have \widehat { v } \sim 60 { km s ^ { -1 } } .
The event lightcurve allows us to obtain a unique fit to the parameters of the binary lens , and to estimate the proper motion of the lensing system .

We have performed a joint fit to the MACHO/GMAN data presented here , including recent EROS data of this event [ Afonso et al .
1998 ] .
These joint data are sufficient to constrain the time t _ { * } for the lens to move an angle equal to the source angular radius ; t _ { * } = 0.116 \pm 0.010 days .
We estimate a radius for the lensed source of R _ { * } = 1.4 \pm 0.1 { { \em R } _ { \odot } } from its unblended color and magnitude .
This yields a projected velocity of \widehat { v } = 84 \pm 9 { km s ^ { -1 } } .
Only 0.15 % of halo lenses would be expected to have a \widehat { v } value at least as small as this , while 31 % of SMC lenses would be expected to have \widehat { v } as large as this .
This implies that the lensing system is more likely to reside in the SMC than in the Galactic halo .
Similar observations of future Magellanic Cloud microlensing events will help to determine the contribution of Machos to the Galaxy ’ s dark halo .