While the market has been watching for a steeper USD/JPY drop to the 106.08 June low eventually, it's proving resilient despite market jitters.
FX traders should be mindful that a "cloud twist" circa 107.90 on Friday could act like a magnet in the short term.
Risk appetite in currency markets diminished in early London trading on Wednesday, after China's foreign ministry said the United States told China on July 21 to close its consulate in Houston nL5N2ET1RG.
In times of uncertainty, with risk aversion on the rise, funds usually flow into the safe-haven yen.
But the dollar has risen versus the yen from Asia's 106.72 low, to break back above the 107.00 level.
FX traders wanting to insure against a USD/JPY rise could buy a one-week 107.10 USD call option at a cost of 25 pips, priced with spot at 107.00.
Profit potential is unlimited if spot is above the 107.35 break-even point at the July 29 expiry.
Losses are limited to the 25-pip premium paid.
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