FxWirePro: Yen likely to extend loss towards 112 per dollar

The yen finally lost its bullish mojo as the dollar continues to hammer. The strength of the dollar, we believe is being driven by two major factors; one, the possibility of an imminent rate hike from the US Federal Reserve and as early as next week; second, the possibility of win by Donald Trump, which we suspect would be more potent than the Fed itself but in a longer term. Trump policies, we suspect would be very bullish for the dollar, even if it declines in the short term due to uncertainties surrounding many of his policies.

The yen has broken above key resistance around 104 per dollar and currently trading at 105.2 per dollar. We suspect that the rough ride for the yen has just begun.

Let us remind our readers that we successfully recommended to short yen around 119 with the target around 98. That was reached on Brexit. We extended that target towards 90 but we suspect that even as the target remains still valid, the yen is in for a correction on the downside.

Trade idea:

We expect the yen, which is currently trading at 105.2 per dollar to weaken towards 112 per dollar. The stop loss can be put around 101 for the trade.