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Oct 27 - 08:55 AM

USD/JPY - COMMENT-FX Traders Might Have To Insure Against A USD/JPY Rise

By Martin Miller  —  Oct 27 - 06:43 AM

USD/JPY's daily chart has a bullish tilt and that is being reinforced by fundamentals. nL1N2RM0RW A simple option strategy can be used to cover short-term gains.

USD/JPY hit a four-year EBS high of 114.69 on Oct.
20 then subsequently dropped to a one-week EBS low of 113.42 on Friday.
The drop was stemmed by the 113.28 Fibo, a 23.6% retrace of the 108.73 to 114.69 rise and there is talk Japanese importer, investor bids remain ahead of it.

USD/JPY bulls should stay in control unless there's a daily close under the 113.28 Fibo, as that would increase the downside risk.

FX traders wanting to insure against a USD/JPY rise could buy a one-week 113.80 USD call option at a cost of 37 pips, priced with spot at 113.74.
Profit potential is unlimited if spot is above the 114.17 break-even point at the Nov.
3 expiry.
Losses are limited to the 37-pips premium paid.
Related nL1N2RN0IM

For more click on FXBUZ

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Refinitiv IFR Research/Market Commentary


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