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USD/JPY rallies along with Nikkei, above 122

FXStreet (Mumbai) - The USD/JPY pair caught a fresh bid tone beyond a beak of 200-DMA and stormed its way through 122 handle, extending its recovery from Monday’s extensive slide.

USD/JPY supported above 50-DMA at 121.97

Currently, the USD/JPY pair trades 0.41% higher at 122.08, hovering close to fresh session highs posted at 122.15 last minutes. The bid tone on the USD keeps growing bigger heading into mid-Asian trades, sending USD/JPY higher into the green towards 5-DMA at 122.31.

The major extends its correction higher and gains further traction on the back of a solid rebound staged by the Japanese stocks, which helped improve investors’ sentiment. The Japanese benchmark, the Nikkei jumps over 1% to 19,250 points.

Moreover, anticipation of a Fed rate rise closing in on next week’s Fed meeting also underpins the US dollar, adding to upside in USD/JPY. Looking ahead, markets now await a host of key US economic updates due later today for fresh cues on the pair.

USD/JPY Technical levels to watch

The prices trade firmer and find the immediate resistance is now placed at 122.27/31 (daily R1/ 5-DMA). A break above the last, the major could test 122.55/67 (1h 100-SMA/ 10-DMA). While the immediate support is placed at 121.18 (100-DMA) below which 121.07 (Dec 9 Low) would be tested.

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