Overview:

USD/JPY is expected to trade in a lower range. It is undermined by the flows to the safe-haven JPY and unwinding of JPY-funded carry trades amid increased risk aversion (VIX fear gauge rose 6.48% to 18.41, S&P fell 0.65% Friday) as concerns over emerging markets still persist, exacerbated by signs of slowdown in China. CFLP final China manufacturing PMI for January came in at 50.5 versus 51 in December and the Federal Reserve continues its gradual withdrawal of monetary stimulus. USD/JPY is also weighed by the lower U.S. Treasury yields, Japan export sales and stronger-than-expected Japan's December core CPI (rose 1.3% on year for sharpest rate of annual increase in over five years) which dimmed odds of further monetary easing from the Bank of Japan in near term. But USD/JPY losses are tempered by the demand from the Japanese importers, positive dollar sentiment (ICE spot dollar index last 81.27 versus 81.07 early Friday) as University of Michigan final consumer sentiment index for January came in at 81.2, down from 82.5 in December but higher than the preliminary reading of 80.4, and, finally, stronger-than-expected 0.5% rise in U.S. 4Q employment cost index (versus forecast +0.4%).

Technical сomment:
Daily chart is negative-biased as MACD is bearish, stochastics stays suppressed at oversold zone; five and 15-day moving averages are declining.

Trading recommendation:

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 far as the price is above its pivot point, a long position is recommended with the first target at 100.9 and the second target at 100.45. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.4. A breach of this target will push the pair further downwards and one may expect the second target at 102.75. The pivot point is at 102.

Resistance levels:
102.4
102.75
103.05

Support levels:
101.8
101.55
101.25