FxWirePro: Yen might strengthen to 104.5 against USD, thanks to risk aversion and weak dollar

The Japanese yen reached our anticipated bearish target of 111 per dollar, https://www.econotimes.com/FxWirePro-Call-Review-With-risk-aversion-fading-Bears-might-push-yen-to-111-per-dollar-in-short-term-1257697

and after reaching the target it has risen to 109.8 as of today, riding on risk aversion stemming from European political turmoil, mainly in Italy and in Spain. In Italy, a euro-skeptic, austerity-skeptic coalition has come to power and in Spain, pro-EU Prime Minister had to step down after losing the no-confidence vote.

While the financial markets, mainly equities reached a state of relative calm after a snap election was avoided in Italy, we suspect that the selloff that began back in January/February and rocked global equities is far from over.

Based on our latest calculations, we expect the risk aversion stemming from Europe or further selloffs in equity indices, coupled with a downside correction in the dollar could once again put the yen in the driving seat.

Trade idea:

Buy the Japanese yen against the USD at the current rate of 109.8 per dollar with a target of 104.5 per dollar. The stop loss for this trade should be kept around the recent peak of 111.5 area per dollar.