USD/JPY's daily chart has a bearish tilt and that is being reinforced by fundamentals.
A simple option strategy can be used to cover a short-term relapse.
A bearish engulfing candlestick pattern formed last week on Thursday and Friday: a smaller, white-bodied candle followed by a larger black one.
Usually that is a sign that the market is set to tumble.
A cloud twist next Thursday below 109.00 could exert magnetism, reinforcing the bearish outlook.
USD/JPY is likely to continue trading heavy with markets shrugging off inflation concerns despite high U.S. CPI data and an economic boom in the making.
The pair looks set for low-altitude flight until U.S. yields perk up again. nL2N2NT02M
To insure against a USD/JPY setback traders could, for example, buy a one-week 109.40 USD put option at a cost of 32 pips, priced with spot at 109.45.
Profit potential is unlimited if spot is below the 109.08 break-even point at the June 18 expiry.
Losses are limited to the 32 pips premium paid.
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