USD/JPY is expected to trade in a lower range as the key resistance is at 119.95. Last Thursday, US stock indices settled lower in the last session of 2015, weighed on by shares in semiconductor, technology hardware and software sectors. The Dow Jones Industrial Average fell 1.0% to 17,425, the S&P 500 dropped 0.9%, to 2,043, while the Nasdaq Composite was down 1.2% to 5,007.

Nymex crude oil rebounded 1.2% to $37.04 a barrel, gold was flat at $1,060 an ounce, and the benchmark 10-year Treasury yield closed at 2.173%, down from 2.305% in the previous session.

Meanwhile, the US dollar bounced with EUR/USD falling 0.6% to 1.0860, GBP/USD dropping 0.5% to 1.4743, and USD/CHF surging 1.4% to 1.0018. On the other hand, USD/JPY declined 0.2% to 120.30. The pair fell to as low as 119.95 at the end of 2015 before posting a rebound. Currently, it is trading above the 20- and 50-period (30-minute chart) moving average and the intraday relative strength index has reached the over-bought level of 70. As long as the key resistance at 119.95 is not surpassed, the pair is expected to return to the first downside target at 118.60.

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 118.60. A break of that target will move the pair further downwards to 118. 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, long positions are recommended with the first target at 120.40 and the second target at 120.75.

Resistance levels: 120.40, 120.75, 121

Support levels: 118.60, 118, 117.65