Overview:

USD/JPY is expected to consolidate with bullish bias after hitting near-one-month high at 103.71 on Tuesday. It is underpinned by the yen-funded carry trades amid positive investor risk sentiment (VIX fear gauge eased 5.62% to 13.1; S&P hit record high 1,885.84 before closing up 0.70% at 1,885.52 overnight) on encouraging U.S. ISM manufacturing PMI, which rose to 53.7 in March from 53.2 in February. Although the result is below the 53.9 forecast, it is still affected by Fed's Chairwoman Yellen's dovish comments Monday assuring the U.S. central bank will continue its "extraordinary" support in place for "some time to come." USD/JPY is also supported by demand from Japan importers and investment trusts; weaker yen sentiment on disappointing Japan 1Q Tankan survey, and start of Japan's national sales-tax increase to 8% from 5%. But USD/JPY gains are tempered by Japan's exports, softer dollar sentiment (ICE spot dollar index last 80.06 versus 80.11 early Tuesday) after weaker-than-expected U.S. March ISM manufacturing PMI, downward revision in the U.S. January construction spending to -0.2% from +0.1%; caution ahead of U.S. nonfarm jobs report due on Friday.

Technical сomment:
Daily chart is positive-biased as MACD and stochastics are bullish, although the latter is at overbought zone, five-day moving average is above 15-day MA and is advancing.

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 104.10 and the second target at 104.45. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 102.95. A breach of this target will push the pair further downwards and one may expect the second target at 102.65. The pivot point is at 103.40.

Resistance levels:
104.10
104.45
104.80

Support levels:
102.95
102.65
102.40