Fundamental outlook:
USD/JPY is expected to trade in a lower range. Liquidity is thin in Asia today as financial markets in Japan are shut for a public holiday. USD/JPY is undermined by the weaker USD sentiment (ICE spot dollar index last 95.10 versus 95.44 early Tuesday) after much wider-than-expected U.S. March trade deficit of $51.37 billion (versus forecast $42.5 billion). USD/JPY is also weighed by the flows to haven JPY amid increased risk aversion (VIX fear gauge rose 11.36% to 14.31, S&P 500 closed 1.18% lower at 2,089.46 overnight) on the bad U.S. trade data, sharp 4.06% decline in Shanghai Composite Index on Tuesday, and concerns about Greece's standoff with its creditors. But USD sentiment is soothed by the surprise rise in U.S. ISM non-manufacturing PMI to 57.8 in April from March's 56.5 (versus forecast for drop to 56.3). USD/JPY losses are also tempered by the higher U.S. Treasury yields (10-year at 2.181% versus 2.135% late Monday) and sell-yen orders from Japan's importers.

Technical comment:
The daily chart is mixed as MACD is bullish, five-day moving average is above 15-day moving average and is advancing but stochastics is turning bearish near overbought levels, bearish outside-day-range pattern was completed on Tuesday.

Trading recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 0.7435. A break of that target will move the pair further downwards to 0.7410. The pivot point stands at 0.7580. 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, long positions are recommended with the first target at 0.7635 and the second target at 0.7665.

Resistance levels:
120.50
120.80
121.45

Support levels:
119.55
119.20
118.75