Overview:

USD/JPY is expected to consolidate with bearish bias after hitting a three-week low at 101.50 on Tuesday as markets await 1400 GMT Fed Charwoman Janet Yellen's testimony to U.S. Joint Economic Committee on 'The Economic Outlook.' USD/JPY is undermined by the negative dollar sentiment (ICE spot dollar index last 79.14 versus 79.50 early Tuesday) on bets that Yellen might sound dovish as she reiterates the U.S. economy is recovering but not as strongly as desired, Wall Street losses overnight (S&P 500 closed 0.9% lower at 1,867.72), lower longer-dated U.S. Treasury yields, drop in U.S. IBD/TIPP Economic Optimism Index to 45.8 in May from 48.0 in April and wider-than-expected U.S. March trade deficit of $40.38 billion (versus $40.2 billion forecast). USD/JPY is also weighed by the Japan exporter sales and flows to haven JPY amid increased risk aversion (VIX fear gauge rose 3.84% to 13.8). But USD/JPY losses are tempered by the demand from Japan importers.

Technical сomment:
Daily chart is negative-biased as MACD and stochastics are bearish.

Trading recommendation:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below its pivot point. Short position is recommended with the first target at 101.30. A breach of this target will move the pair further downwards to 101.05. The pivot point stands at 101.95. In case the price moves in the opposite direction and bounces back from support level, and then it moves above its pivot point, it is likely to move further to the upside. In that scenario, a long position is recommended with the first target at 102.20 and the second target at 102.50.

Resistance levels:
102.20
102.50
102.80

Support levels:
101.30
101.05
100.75