Safe haven currencies such as the Yen and thee CHF have been in demand since the start of the year. EUR/CHF broke some major support levels in February. Every attempt on the part of the buyers to push higher was met by even more selling pressure, with highs getting lower.

The same occured with USD/JPY; it broke 1.10 and reached close to 1.08. But over the last two weeks, we have witnessed a reversal in both these forex pairs.

It all started (or ended) when Le Penn failed after the first round of French presidential elections. The market was relieved because if she had gotten ahead, the chances were for her to win the final round. The odds that the Eurozone would survive after that would be slim.   

After that, the safe haven currencies started tumbling and the Euro surged. This means that all the Euros poured into these two safe havens in case Le Penn won, started reversing once everyone was reassured that Europe would survive.  

We are closing a long-term buy signal in EUR/CHF after the gap, since it was a good opportunity to pocket some pips, taking into account the heavy selling pressure over the previous months. This forex pair is about 100 pips higher now, while USD/JPY has broken all resistance levels.

EUR/CHF is finally above the range

What would be the best trade right now?

Going in at the moment would be too risky because these pairs have gone too far too fastrisk/reward ratio would be too great for our liking.

I´d wait for a retrace lower, especially if we get a fresh wave of risk aversion and run for safety. 1.0780-1.08 would be a good place to consider buying EUR/CHF and 110 for USD/JPY. By that time the retrace should be over.