Fundamental overview:
USD/JPY is expected to consolidate with bearish bias after hitting three-week low 118.05 on Tuesday. It is undermined by the selling of yen crosses amid decreased risk appetite (VIX fear gauge rose 6.02% to 21.12, S&P 500 closed 0.89% lower at 2,002.61 overnight) as lingering eurozone worries, continued fall in oil prices to fresh five-and-a-half year lows and bigger-than-expected drop in U.S. ISM non-manufacturing PMI to 56.2 in December from 59.3 in November (versus forecast 58.0) stoked concerns over the global growth outlook. USD/JPY is also weighed by the lower U.S. Treasury yields (10-year at 1.949% versus 2.037% late Monday) and Japan exporter sales. But USD/JPY losses are tempered by the demand from Japan importers and Bank of Japan's large-scale monetary easing policy, broadly firmer dollar undertone (ICE spot dollar index hit nine-year high 91.808 Tuesday, last at 91.73 versus 91.36 early Tuesday) and smaller-than-expected 0.7% drop in U.S. November factory orders (versus forecast -0.8%).

Technical comment:
Daily chart is negative-biased as MACD and slow stochastic indicators bearish, five-day moving average is staged bearish crossover against 15-day moving average.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as far as it remains below the pivot point. Short positions are recommended with the first target at 118.5. A break of this target will move the pair further downward to 118. The pivot point stands at 119.50. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, a long position is recommended with the first target at 119.95 and the second target at 120.3.

Resistance levels:
119.95
120.3
120.75

Support levels:
118.5
118
117.75