Fundamental Outlook:
USD/JPY is expected to consolidate after hitting almost a one-month low of 119.22 on Tuesday. It is underpinned by the improved dollar sentiment (ICE spot dollar index last 97.23 versus 96.93 early Tuesday) after higher-than-expected US February core CPI of +0.2% on-month and +1.7% on-year (versus forecast +0.1% on-month, +1.6% on-year), a surprise increase of 7.8% in US new home sales to 539,000 in February (versus forecast for a drop of 4.2% to 461,000), and stronger-than-expected US March flash manufacturing PMI of 55.3 (versus forecast 54.0). USD/JPY is also supported by the demand from Japan's importers, and the ultra-loose Bank of Japan's monetary policy. The USD/JPY upside is limited by the lower US Treasury yields (10-year at 1.873% versus 1.915% late Monday), the Japanese exports, flows to the safe-haven yen amid decreased risk tolerance (VIX fear gauge rose 1.57% to 13.62, S&P 500 closed 0.61% lower at 2,091.5 overnight) on fresh signs of a slowdown in China. HSBC China March flash manufacturing PMI came at 49.2 that turned out to be weaker than expected (versus forecast 50.6).

Technical comment:
The daily chart is still negative-biased as the MACD and stochastics are bearish, 5-day moving average is below 15-day moving average and is declining.

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 119.25. A break of that target will move the pair further downwards to 119. The pivot point stands at 119.95. 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 120.30 and the second target at 120.65.

Resistance levels:
120.30
120.65
120.85

Support levels:
119.25
119
118.75