FxWirePro: Buy yen at dips targeting 101 per dollar

The Japanese yen which is considered as the top safe haven currency has overwhelmingly underperformed, since the first round of the French election. As the Front National leader Marine Le Pen failed to win the first round and was beaten by a pro-EU candidate Emmanuel Macron, the yen has slid from 109 to 112.1 as of today. The easing of the geopolitical tensions in the Korean peninsula and the improvement in the relationship between Moscow and Washington, despite president Trump’s missile attack on Syria, have also contributed to the slide.

However, one should take note that the risk-off fundamentals that have fueled yen’s rise, especially in early April and pushed it to as high as 108 per dollar have not abated but eased. Several other high-profile elections are still to come across the European continent, especially the UK election and the German election. In addition to that, the dollar’s underperformance after the second round of the French election would be supportive of the yen. The current value of the yen may not be correctly reflecting the fundamentals.

We recommend buying the yen at dips against the dollar with a target around 101 per dollar. Proffered buying areas are here at 112 (10 percent of the total intended position), then at 114 (20 percent of the total intended position), then at 115 (60 percent of the total intended position) and finally at 116.5 (10 percent of the total intended position). We would recommend stop loss after entering fully into the trade.