USD/JPY is expected to trade in a lower range as a bias remains bullish. Overnight, the US stock indices ended lower as once again energy shares were depressed by the continued decline in oil prices. The Dow Jones Industrial Average fell 1.4% to 17495, the S&P 500 lost 1.5% to 2041, and the Nasdaq Composite was down 1.4% to 5002. Nymex crude oil declined 1.6% to $34.95 a barrel.

The benchmark 10-year Treasury yield was down to 2.236% from 2.291% at the previous session. And gold plunged 2.0% to $1,051 an ounce. The US dollar kept strengthening in the wake of the Fed rate increase with the Wall Street Journal Dollar Index rising 0.8% to 90.75. EUR/USD dropped 0.8% to 1.0825, GBP/USD fell 0.7% to 1.4900, while USD/JPY was up 0.3% to 122.55. At the same time, the US dollar posted solid gains against commodity-related currencies, with USD/CAD surging 1.1% to 1.3935, AUD/USD plunging 1.5% to 0.7125 and NZD/USD down 1.4% to 0.6697. The pair rose to as high as 122.87 overnight before entering a consolidation phase. The 20-period (30-minute chart) moving average remains above the 50-period one, while the pair is currently trading around the 50-period moving average. At the same time, the level of 122.60 (an over-lapping level of resistance and support seen on December 16) still holds as the key resistance. As long as the pair ends the consolidation below the key resistance at 122.60, it should resume its downward path toward the first downside target at 121.50 (a resistance seen on December 8). The second downside target is seen at 121.20. 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 121.50. A break of that target will move the pair further downwards to 121.20. The pivot point stands at 122.60 . 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 123.05 and the second target at 123.50. Resistance levels: 123.05 123.50 123.85 Support levels: 121.50 121.20 120.90