USD/JPY is expected to consolidate with a bearish outlook. Overnight, the US stocks managed to close with small losses despite the recent slump in oil prices. The Dow Jones Industrial Average edged down 0.1% at 16449, the S&P 500 lost less than 1 point at 1939, while the Nasdaq Composite was up 0.1% at 4620. Shares in utilities, food & staples retailing, and consumer services sectors traded higher, while those in energy, banking, and diversified financial sectors were under pressure.

Nymex crude oil plunged 6.0% to $31.62 a barrel, gold gained 1.0% to $1,128 an ounce, while the benchmark 10-year Treasury yield climbed to 1.966% from 1.928%.

Meanwhile, the US dollar weakened against other major currencies. EUR/USD rebounded 0.5% to 1.0886, GBP/USD surged 1.3% to 1.4429, NZD/USD was up 1.2% to 0.6545. At the same time, the greenback turned weaker against the Canadian dollar despite plunging oil prices, with USD/CAD falling by 0.2% to 1.3945. The pair failed to exceed last Friday's high of 121.68 and drifted lower. It is currently capped by the descending 20-period (30-minute chart) moving average, which crossed below the 50-period one. And the intraday relative strength index remains below the neutrality level of 50 lacking upward momentum. As long as the consolidation continues, the pair could return to the first downside target at 120.25 (around yesterday's low) and to second one at 119.60 in extension.

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 120.25. A break of that target will move the pair further downwards to 119.60. The pivot point stands at 121.25. 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 121.70 and the second target at 122.20.

Resistance levels: 121.70, 122.20, 122.70

Support levels: 120.25, 119.60, 119.45