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Forex pairs in this Article » USD/JPY (Barcelona) - The USD/JPY, bolstered by the fundamentally erratic correlation with the Nikkei index - up 1% -, has found plenty of buyers affiliating to the idea of a bullish break above 98.50, which now sets the stage for a recovery towards 98.70 peak, effectively wiping out all the losses from the Syria-induced slide earlier last week.

Nikkei sticks with Syria, sales tax headlines

Tokyo players are playing a relief-rally type of move, with buying on weakness still perceived as good value after Syria risk headlines over the weekend failed to trigger any flight to safety - just yet - as the US prefers to await for Congressional approval before launching what might be an unilateral attack against the Syrian regime.

There has also been a couple of relevant developments in Japan over the weekend, one thought to be USD/JPY positve, while the other one should put downward pressure on the Nikkei, which it hasn't so far.

The first encouraging news for the interest of Yen sellers came from Japan's Economy Minister Akira Amari, who said "there are more experts who say Japan should follow the sales tax hike plan than those who say we shouldn't." The implementation of a consumption tax on April 2014 is perceived as Yen negative on the basis of more BoJ easing.

The second developing story should be USD/JPY negative, as reports now suggest radiation levels surrounding Japan's Fukushima nuclear plant are thought to be 18 times higher than previously reported, according to Japanese authorities.

USD/JPY technical levels

Traders should be reminded that markets are likely to remain thin later today on US Labor Day holiday, so any move may may be exaggerated. As the technicals stand, it appears that the next hurdle to the upside will be faced between 98.70-80, sequence of hourly swing highs on Aug 26, ahead of 99.00. On the downside, 98.50 may see first attempts to buy on dips followed by 98.30, with the levels coinciding with previous resistances recently broken.
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