USD/JPY is expected to trade in a lower range. It is undermined by the broadly weaker USD undertone (ICE spot dollar index last 95.26 versus 96.40 early Monday) after a news report cited President Barack Obama as saying he was worried about a strong dollar was a problem, triggered liquidation of long USD positions, although the White House and Mr. Obama himself denied the report. USD/JPY is also weighed by lower US Treasury yields (2-year slipped 3.7 bps to 0.684% Monday), Japan's exports, and flows to haven JPY amid increased risk aversion (VIX fear gauge rose 7.6% to 15.29, S&P 500 closed 0.65% lower at 2,079.28 overnight). But USD/JPY losses are tempered by the lingering impact of strong US May non-farm payrolls report published on Friday, demand from Japanese importers, and ultra-loose Bank of Japan's monetary policy.

Technical comment: The daily chart is mixed as the MACD is bullish, but stochastics is turned bearish at overbought levels.

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 123.75. A break of that target will move the pair further downwards to 123.40. The pivot point stands at 124.85. 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 125.15 and the second target at 125.35.

Resistance levels: 125.15 125.35 125.95

Support levels: 123.75 123.40 122.90