Overview:

USD/JPY is expected to consolidate in a higher range as markets await 1800 GMT Federal Reserve interest rate announcement which is followed by Janet Yellen press briefing: the Fed is expected to reduce its mortgage and Treasury bond buying program by another $10 billion to $35 billion per month. USD/JPY is underpinned by the positive USD sentiment (ICE spot dollar index last 80.61 versus 80.45 early Tuesday) and higher U.S. Treasury yields after faster-than-expected 0.4% rise in U.S. May CPI (versus +0.2% forecast) stoked speculation that the Fed may raise interest rates sooner than markets had originally expected. USD/JPY is also supported by the demand from the Japanese importers, PM Abe's plans to cut corporate income taxes and turn the $1.3 trillion Government Pension Investment Fund into a more risk-taking equities-focused investor and yen-funded funded carry trades amid improved investor risk appetite (VIX fear gauge eased 4.66% to 12.06) as U.S. stocks rose overnight (S&P 500 closed up 0.22% at 1,941.99). But risk sentiment are dented by the larger-than-expected 6.5% drop in the U.S. May housing starts (versus -3.7% forecast) and 6.4% decrease in U.S. May building permits (versus -1.9% forecast). USD/JPY gains are also tempered by the Japan exporter sales.

Technical comment:
Daily chart is mixed as MACD is bearish, but stochastics is turned bullish.

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 102.40 and the second target at 102.65. In an alternative scenario, if the price moves below its pivot points, short positions are recommended with the first target at 101.75. A breach of this target will push the pair further downwards and one may expect the second target at 101.55. The pivot point is at 101.90.

Resistance levels:
102.40
102.65
102.80

Support levels:
101.75
101.55
101.45