USD/JPY is expected to trade with bullish bias. Overnight, U.S. stocks rebounded as oil shares climbed with rallying crude prices. Better-than-expected quarterly results posted by large firms like Johnson & Johnson and 3M also contributed to the rise. The Dow Jones Industrial Average gained 1.8% to 16,167, the S&P 500 rose 1.4% to 1,903, while the Nasdaq Composite was up 1.1% to 4,567.

Nymex crude oil rose 3.7% to $31.45 a barrel, and gold gained another 1.3% to $1,121 an ounce.

While U.S. Federal Reserve officials began a two-day meeting over the monetary policy, the benchmark 10-year Treasury yield eased further to 1.996% from 2.022% in the previous session.

Meanwhile, the U.S. dollar weakened against commodity currencies, with USD/CAD plunging 1.2% to 1.4114, giving back all gains made on Monday. AUD/USD rebounded 0.7% to 0.7002 and NZD/USD was up 0.7% to 0.6497. At the same time, EUR/USD rose 0.2% to 1.0869; and GBP/USD was up 0.7% to 1.4350.

Overnight, the pair rebounded to as high as 118.62 from a low of 117.62. Currently, it keeps trading on the upside and is seeking support from the 50-period (30-minute chart) moving average. The 20-period moving average still stands above the 50-period one. As long as 117.90 holds as the key support, the pair should continue its rebound and rise towards the first upside target at 118.85 (resistance tested repeatedly on January 22-25). However, in case of breaches below 117.95, expect a further decline towards 117.60 (around yesterday's low).

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 118.60 and the second target at 168.85. In the alternative scenario, short positions are recommended with the first target at 117.60 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 117.18. The pivot point is at 117.90.

Resistance levels: 118.60, 118.85, 119.25

Support levels: 117.60, 117.18, 116.75