USD/JPY is expected to consolidate with risks skewed lower after hitting the eight-day high of 123.72 on Tuesday. USD/JPY is undermined by the weaker dollar sentiment (ICE spot dollar index last 96.60 versus 96.80 early Tuesday) after a surprise 0.3% on-month drop in the US June retail sales (versus forecast +0.2%), the weaker-than-expected US June NFIB Index of Small Business Optimism (came in at 94.1 versus forecast 98.4), and an unexpected 0.1% on-month drop in the US June import price index (versus forecast +0.1%). USD/JPY is also weighted by the lower US Treasury yields (10-year slipped 3.2 bps to 2.397% Tuesday) and Japan's exports. But USD/JPY losses are tempered by the reduced safe-haven appeal of the yen amid diminished investor risk aversion (VIX fear gauge eased 3.81% to 13.37; S&P 500 closed up 0.45% at 2,108.95 overnight), demand from the Japanese importers, and the Bank of Japan's ultra-loose monetary policy.

Technical comment:

The daily chart is tilting positive as stochastics is in bullish mode, the MACD is turning bullish, five-day moving average is rising above 15-day moving average.

Trading recommendations:

The pair is trading above its pivot point. It is likely to trade in a wider range as long as it remains above its pivot point. As long as the price holds above its pivot point, long positions are recommended with the first target at 124.35 and the second target at 124.60. In the alternative scenario, short positions are recommended with the first target at 122.85 if the price moves below its pivot points. A break of this target is likely to push the pair further downwards, and one may expect the second target at 122.40. The pivot point is at 123.15.

Resistance levels: 124.35 124.60 135

Support levels: 122.85 122.40 122