Overview:
USD/JPY continues to range trade. The rate is underpinned by buying of yen crosses amid improved risk appetite as European stock markets staged broad-based gains on Tuesday (DAX up 1.13%; FTSE 100 up 0.95%) on better-than-expected corporate earnings, in particular Deutsche Bank AG and oil group BP; diminished worries over Spain and Italy; 2.0% rise in U.S. August S&P/Case-Shiller 20-city composite home price index. USD/JPY is also supported by demand from Japan importers and investment trusts. But USD/JPY upside is limited by Japan exporter sales; concerns about U.S. "fiscal cliff" in early 2013 that could throw the U.S. economy back into recession; uncertainty over outcome of next week’s Obama-Romney U.S. presidential election.
Preference:
Sell below 79.75 with targets 79.3 and 79.14.
Support Levels:
S1 - 79.27 (Tuesday's low)
S2 - 79.14 (Oct. 19 low)
S3 - 78.91 (Oct. 18 low)   
Alternative scenario:
In case of upward movement BUY above 79.75. The upside penetration of 79.75 will call for 79.9 and 80.1.
Resistance Levels:    
R1 - 79.9
R2 - 80.1
R3 - 80.38 (Friday's four-month high)
Technical Comment:
The pair stands below its resistance and remains under pressure. USD/JPY daily chart is mixed as MACD is bullish, but stochastics is falling from overbought.