Overview:

USD/JPY is expected to trade in a range. It is underpinned by the yen-funded carry trades amid improving investor risk appetite (VIX fear gauge eased 11.22% to 15.12) as the U.S. stocks rose overnight (S&P 500 closed up 0.72% at 1,938.99), helped by some encouraging U.S. earnings reports, Portugal's announcement of a EUR 4.9 billion rescue for its second largest lender Banco Espirito Santo as well as reduced concerns that contagion from Argentina's debt default may spread. The USD sentiment is boosted by the jump in U.S. ISM-NY Current Business Conditions index to 68.1 in July from 60.5 in June; 6.6% rise in Conference Board U.S. employment trends index to 120.31 in July. USD/JPY is also supported by the demand from Japanese importers. But USD/JPY upside is limited by Japanese export sales and lower U.S. Treasury yields as Friday's weaker-than-expected U.S. July non-farm payrolls report continues to reverberate.

Technical comment:
The daily chart is mixed as MACD is bullish, 5 and 15-day moving averages are advancing, but stochastics is bearish in the overbought zone, inside-day-range pattern was completed on Monday.

Trading recommendations:
The pair is trading above its pivot point. It is likely to trade in a higher range as far as it remains above its pivot point. As long as the price is keeping above its pivot point, a long position is recommended with the first target at 103 and the second target at 103.40. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.30. A break of this target would push the pair further downwards and one may expect the second target at 102.15. The pivot point is at 102.55.

Resistance levels:
103
103.40
103.75

Support levels:
102.30
102.15
101.85