USD/JPY is expected to trade with a bullish bias. Trading at 97.331, the US Dollar Index plunged to 96.310 in last Friday's (July 31) session after the US Labor Department's reporte that the employment-cost index had risen seasonally-adjusted 0.2% on-quarter in Q2 (vs +0.6% expected, +0.7% in 1Q), the smallest quarterly increase since 1982. While economic data dampened expectations for the Fed's interest rate increase, the US dollar made a swift rebound. Meanwhile, USD/JPY is trading below the key resistance at 124.35. As intraday indicators (20- and 50-period intraday moving averages, intraday RSI) are mixed, caution is advised. As long as the resistance at 123.80 is not surpassed, the risk of returning to the first downside target at 123.50 (around the low of July) remains high.

Technical comment:

The daily chart is still negative-biased as the MACD and stochastics are bearish, five-day moving average is below 15-day moving average and is declining.

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 keeps above its pivot point, long positions are recommended with the first target at 124.35 and the second target at 124.60. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 123.50. A break of this target would push the pair further downwards, and one may expect the second target at 123.30. The pivot point is at 123.80.

Resistance levels: 124.35 124.60 124.85

Support levels: 123.50 123.30 122.85